CrestsX
  • Welcome to CrestsX
    • Purpose of this document
  • OVERVIEW
    • Introduction to Exchange
    • Evolution of Orderbook
    • PROs and CONs of Orderbook
  • CRESTSX
    • CrestsX Prominences
    • CrestsX and Features
      • Orderbook Spot Trading
      • NFT Orderbook
      • Derivative Warrants
      • AI Trading Strategies
        • CrestsX AI Process
      • Copy Trade
      • Referral Program
      • Portfolio Dashboard
    • Crests Network
    • Roadmap
    • Conclusion
  • LEGAL
    • Term of use
    • Privacy Policy
  • GETTING STARTED
    • Getting Started
  • CONTACT US
    • Contacts
  • Visit CrestsX.com
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  1. OVERVIEW

Introduction to Exchange

This section aims to provide an overview of the background of cryptocurrency exchanges and orderbook, as well as a comprehensive understanding of centralized and decentralized exchanges.

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Last updated 2 years ago

1. Cyptocurrency Exchange

Cryptocurrency exchange is a trading platform that allows users or traders to exchange between fiat currency and Digital currency (Crypto-currency) or between two digital currencies. There are two types of exchange; Centralized and Decentralized exchange.

2. Centralized exchange

A centralized exchange (CEX) is operated by trusted intermediaries who act as wallet custodians to conduct transactions. Buy and sell orders are listed and sorted in the orderbook system, allowing users to trade cryptocurrencies at the best available market price. Popular CEXs include Binance, Coinbase, and Kraken.

Centralized exchanges are convenient but criticized for their lack of decentralization and reliance on third-party intermediaries. Traders deposit their assets, making them vulnerable to fraud and theft, particularly in the DeFi space, where "rug pulling" is a concern. Traders must be cautious, evaluate exchange trustworthiness, and take security measures to protect assets.

3. Decentralized exchange

A decentralized exchange (DEX) is a platform for trading cryptocurrencies that runs independently of a centralized authority or middleman to make trades possible. Instead, a DEX enables users to transact in cryptocurrencies directly with one another by using blockchain technology and smart contracts, which have been developed to solve the problem of human central authority leading to more security and more transparency. There have been many advancements and developments in the format of DEX, such as:

  1. Automated Market Makers (AMMs): AMMs use algorithms to determine the price of assets based on the supply and demand of the market, ex. Uniswap, Pancakeswap.

  2. Orderbook-Based DEX: These are DEXs that use a traditional orderbook system, similar to centralized exchanges ex. DyDx, Polkadex, GMX.

Cryptocurrency Exchange Diagram