Centralized Exchange (CEX)

A Centralized Exchange (CEX) is a cryptocurrency trading platform operated by a centralized organization that acts as an intermediary between buyers and sellers. Users deposit their funds into the exchange's custody, allowing the platform to manage order matching, custody, and transaction settlements.

While CEXs often offer high liquidity and user-friendly interfaces, they require users to trust the exchange with their assets and personal data. This centralized control can lead to vulnerabilities, such as hacking risks, regulatory interventions or fund mismanagement. For web3 developers, understanding the dynamics of CEXs is crucial when designing systems that may interact with or provide alternatives to centralized trading platforms.