Token and Cryptocurrency Exchanges
There are two types of token exchanges : centralized CEX exchanges and decentralized DEX exchanges.
Centralized Exchange (CEX) works like a classic brokerage exchange: you deposit funds into an account and the exchange does the buying and selling for you. The advantage is that the Exchange does all the work, and is often insured and regulated by the authorities. Most Exchanges, such as COINBASE and BINANCE, are centralized. One advantage to these Exchanges is that they accept credit or debit card payments and bank transfers. They can also pay in fiat currencies, such as dollars or euros, which many users prefer.
Decentralized Exchange (DEX) is a marketplace for Cryptocurrencies and Tokens that is open to everyone. No one is in control of a DEX; people buy and sell on an individual basis through Peer-to-Peer trading applications. One way to think of a DEX is as a “do-it-yourself” trading solution: you make the trades, the funds move out of your account. The biggest advantage of this system is that your funds never have to be entrusted to a trading firm or other third party and will always remain in the wallet of the person making the transaction. These exchanges operate exclusively with digital currency.
Advantages of a DEX over a CEX
- A DEX can be more resistant to hacking than a CEX because account information is not shared with the exchange operator: funds may be held in your account and you will be the only person with access.
- Theoretically, governments or regulators cannot shut down a DEX because it is decentralized, operating across a wide variety of nodes.
- A DEX operates across the cloud through a variety of nodes and there is no single server that can be blocked or hacked.
- There is a higher degree of privacy on a DEX because you are not sharing data with the operator.
- On a DEX you maintain control of your funds in your personal account.
- A DEX can be faster because you do the transactions yourself.
Disadvantages of a DEX over a CEX
- Funds are not regulated or insured. Regulated exchanges may be required to return your money at any time, so keep your funds in escrow for quick withdrawals.
- Most DEXs do not accept credit card, debit card or wire transfer payments
- Trading volume is limited, which can keep prices low and fees high
- Services available from DEXs are limited: Margin Trading, Stop Loss and trades involving fiat currencies are not offered.
- There may be no customer service to contact when there is a problem
- A DEX can be much more expensive than a CEX because you may need to buy Ethereum Gas (ETH) every time you make a transaction.
Commercio.network is planning to implement its own DEX solution that will allow to trade Fungible and Non-Fungible Tokens (NFT), through a self-managed wallet, using a protocol on Cosmos called IBC through which you can access a worldwide pool of liquidity and users interested in trading Tokens.