Top Crypto Trading Platforms: Combining CEX and DEX

When it comes to trading or investing in crypto, there are usually two separate domains you’ll hear about – Centralized Exchanges (CEX) and Decentralized Exchanges (DEX). You’re likely aware that CEX platforms are regulated, whereas DEXes are wholly autonomous and anonymous. Each type of exchange brings its flavor to the table, and each comes with its own unique set of perks (and irks) when it comes to user experience. So, crypto traders are used to facing a choice: either to go decentralized or to go centralized, with no middle ground in sight.

However, in recent years, there’s been a trend for merging the features of CEX and DEX platforms. This hybrid approach combines the traditional CEX user experience with the speed, efficiency, and anonymity of a DEX crypto exchange. In the end, the traders no longer have to wonder, “Which should I choose?” and can enjoy the best of both worlds under one roof. So, let us shed light on this hybrid model and point at some platforms where you can get a feel for what it means to trade hybrid.

The CEX/DEX Tradeoff

Before we dive in, let’s go through the main reasons CEX crypto exchanges and decentralized crypto trading platforms traditionally stand apart.

CEX Crypto Exchange Cons & Pros

It’s no secret that crypto trading is dominated by traditional, centralized exchanges like Binance, Coinbase, ByBit Kraken, KuCoin, OKX and so on. The reason is that they work in a very similar fashion to your traditional stockbroker. They provide ease and convenience for traders of all types, along with deep liquidity and legal protection. So, most active traders worldwide, when looking to dabble in crypto, will likely stick to a CEX crypto exchange. Centralized platforms strive to deliver advanced analytical and trading tools, as well as terms and fee schedules favorable to their users. CEXes bet for the long term by providing fee discounts and bonuses to active and/or large-scale traders. This is why whales from traditional markets, when transitioning to crypto, are most likely to choose a CEX.

Being centralized and regulated, a CEX crypto exchange offers custody and assurance of its users’ protection. Yes, there have been unfortunate hacks and exploits of CEX safety, as well as out-and-out scams, but the rule of thumb is – when you’re using a CEX, you are legally insured. The regulator both looms over you and protects you from mishaps and malicious acts. If your funds are compromised, the platform can be held accountable. The big tradeoff here is, obviously, having to do KYC. Most centralized exchanges require you to hand over your ID and other data, sometimes even to use the basic features of the platform. So, even the best platform to trade crypto is often locked behind a KYC wall. What’s more, on some platforms, approval delays can be annoyingly long. So, no anonymity and no swift onboarding there, which rubs hardcore crypto fans and privacy hawks the wrong way.

To sum up, a CEX crypto exchange will draw traders who want a smooth and tailored user experience and don’t mind handing over their personal details in exchange for convenience and legal protection.

DEX Crypto Exchange Cons & Pros

Decentralized exchanges – or DEXes – run entirely on the blockchain and make up what’s called DeFi, or Decentralized Finance. All transactions there are handled by smart contracts – self-executing pieces of code. All wallets and accounts are pseudonymous and do not ‘belong’ to any particular user or entity. In DeFi, whoever has the private keys to a wallet ‘owns’ it.

Thus, a DEX crypto exchange offers total freedom and anonymity to its users. Decentralized platforms offer myriads of coins and tokens that often don’t get listed even on top CEXes. What’s more, DeFi is full of advanced trading DApps that can supercharge and automate your analytics and training strategies. The tradeoff here is the absence of any legal backing – it’s just not possible on the blockchain, as there is no custody and no regulatory compliance. You are your own bank, yes, but you’re also your own bodyguard. So, DEXes are mostly picked by traders who value privacy and anonymity above all and are willing to take responsibility for their own actions. With that DEXes offer lower liquidity than CEX platforms, which didn’t sound too attractive to institutional traders with large orders to fill.

Another tradeoff of DEXes is that they pose a steep learning curve for the newcomer. Using DeFi DEX platforms requires you to be versed in blockchain, whereas most active traders reasonably prefer a Plug’n’Play experience.

So, a DEX is for someone who could say, “I love blockchain, and I understand how it works; I value anonymity and freedom, and I am willing to take full responsibility for the security of my own funds.”

Meanwhile, a CEX trading platform is for someone who could say, “I just want to trade/invest with no technical headaches; let the broker sort out the backend for me, and I don’t mind disclosing my personality in exchange for security.”

Obviously, this tradeoff is somewhat polarizing, as it essentially divides crypto users into separate camps, each having little to do with the other. Wouldn’t it be great to combine the best of both worlds under one roof? The answer is yes, it would, and in recent years, many leading platforms have tinkered with this hybrid model.

Hybrid Crypto Trading Platforms

Many top crypto trading platforms these days try to marry the unique benefits of CeFi and DeFi into one interface. Their users can enjoy both the ease of use of a CEX crypto exchange and the freedom and flexibility of DEXes. Thus, active traders can unlock an endless sea of coins, tokens, and all types of synthetic assets – all with deep liquidity. You can trade major coins and tokens on a CEX while also flipping niche DeFi tokens while staying in the one ecosystem.

For arbitrage traders, this hybrid model is beyond competition. DeFi aggregators such as 1inch and Matcha can build complex routes for efficient and profitable token swaps across chains, which can’t be met in traditional, regulated exchanges. So, full-time arbitrageurs can tap into both the accessibility of a CEX crypto exchange and the “major platform” factor while also being able to channel their funds into DeFi for extended trade routes.

One of the main draws of hybrid platforms is the flexibility they offer in terms of asset management. You no longer have to choose “either/or” in terms of custody or non-custody. You can take advantage of both, keeping part of your funds in the centralized broker’s accounts and the other part in your non-custodial wallet. Previously, you had to choose: you could either have third-party protection and peace of mind or freedom and flexibility. Nowadays, you can have both.

Another upside of this hybrid approach is the DeFi staking rates it opens up, along with other passive income opportunities. Investors out there will know that staking rates on centralized exchanges are often quite dull, whereas, in DeFi DEX, staking is a pure feast, with hundreds of % APR being the norm. CEX users can leverage endless staking opportunities in DeFi while knowing that they can quickly and easily transfer their capital over to the centralized realm to use it there.

All this is not to mention the possibility of exploring endless decentralized apps (DApps) while remaining connected with your centralized broker.

So, let’s sum up. CEX crypto exchanges are kind of like your big, popular supermarket chain. Everything is laid out for you, everything’s properly stocked. You have confidence that if something goes wrong – say, you buy expired milk – your issue will be looked into and sorted out. In exchange, you show your ID or sign up for a membership, and agree that the store will be tracking your purchases. Also, the prices are set by the chain, so you’re always paying extra.

DEXes, on the other hand, are like your local farmers market. There’s no middleman running things; you deal directly with vendors, and no one asks you to sign up. The prices are unregulated, and you can find the sweetest deal on that fresh lettuce. But, if something go wrong, you have no one to call for help. Should a vendor disappear or runs out of stock – you’re the only one handling the risks.

Hybrid platforms, in turn, are like your local co-op. You get both the streamlines experience of a supermarket, but with a farmer’s market vibes. You still deal directly with vendors, but the whole experience is streamlined and managed for your convenience.

With that in mind, let’s explore some of the top-ranking crypto exchanges known to combine the key features of CEX and DEX platforms.

Top Crypto Trading Platforms Combining CEX and DEX Features

CEX Crypto Excnahges with DeFi integrations

Binance

Binance, the undisputed titan of CeFi (Centralized Finance), has also integrated DeFi features into its platform – namely, the Binance Web3 Wallet. It allows all Binance users to create their own non-custodial wallet and use it to explore the world of DeFi.

The Binance Web3 Wallet is ingrained into the official Binance mobile app. Creating a wallet is done in a standard way: you generate the seed phrase, secure it, and you’re good to go. You can connect the Binance Web3 to any DeFi service or DApp, while remaining inside the Binance ecosystem. And yes, there’s the option to seamlessly move your funds between the Web3 wallet and your main Binance account, although with a slight fee. Thus, you get a CEX crypto exchange with a doorway into the world of DeFi.

KuCoin

KuCoin, another popular kid on the CeFi block, has been tinkering with DeFi features as well. Namely, it has launched a platform called Pool-X, which offers DeFi staking options and lets KuCoin traders tap into decentralized liquidity pools along with centralized ones.

To make things swift, KuCoin has also rolled out its own blockchain network called KuCoin Community Chain (KCC). KCC serves as a bridge between traditional KuCoin users and the vast ocean of DeFi products – DApps, decentralized exchanges, lending protocols, Web3 games, and so on. The connection is possible via any Web3 wallet. Community voting on KCC and individual privileges come by way of holding the KCS – the native coin of the KCC ecosystem.

OKX

OKX, another popular CEX crypto exchange, offers some of the most competitive fees and probably the sleekest trading interface among top crypto trading platforms.

Being passionate about all things crypto, the team couldn’t ignore the growing need for DeFi integrations and have rolled out two products for exploring the world of Web3 – namely, the non-custodial OKX Wallet and an in-built DApp browser. The OKX Wallet works just like any other Web3 wallet – we’re talking about self-custody, seed phrases, and the complete freedom to transact on the blockchain without intermediaries. The Web3 browser allows you to explore and manage DeFi protocols and your funds on them without leaving the OKX interface.

Phemex

Phemex takes the CeFi/DeFi game to the next level by incorporating a slew of Web3 features into its offerings. First is the Phemex Soul Pass token – a full-blown Ethereum Soulbound token, if that rings familiar.

Souldbound tokens are a fresh innovation in the Ethereum ecosystem – it’s essentially a non-transferrable NFT that is ‘bound’ to its owner’s ‘soul.’ Consider it a unique but pseudonymous blockchain ID card that can be used to engage in complex social activities across the Web3 realm.

For now, Phemex is the only CEX crypto exchange that has launched its own souldbound tokens. Also, there’s Phemex Pulse, the exchange’s own decentralized social network, where these soul tokens can be utilized. Also, it offers Phemexia – a gamified Web3 “colony” where the platform’s users can live a whole virtual life, mutually benefiting the platform. Apart from that, Phemex offers its own DeFi lending protocol and staking functionality. It’s fair to say that right now, Phemex offers the broadest and the most innovative hybrid CEX/DEX features you can find.

DEX Crypto Exchanges Exchanges with CEX integrations

dYdX

If you’ve been trading crypto for a while, you’ve likely heard of dYdX. It’s a professional DEX crypto exchange for trading perpetual crypto futures. Trades are executed directly on smart contracts, right from the comfort of your non-custodial wallet. dYdX is built on the Ethereum blockchain using Starkware layer-2 solutions. So, while having the coverage and integrability of Ethereum, its transactions run through another layer of smart contracts, allowing for instant order execution speeds and low fees.

What’s also notable is that dYdX offers a serious, professional-grade suite for market analysis and order execution. We’re talking about a decentralized order book/depth of market, advanced charting tools, and various advanced order types, not to mention leverage and margin management options. While being completely decentralized on the user end, dYdX still has a somewhat centralized order book matching engine. This translates to speedy large-order execution with no tangible latency – a dream for active, intraday professional traders who want the best of both the CEX and DEX worlds.

Right now, dYdX handles millions of trades per day and is probably the best decentralized crypto exchange to offer professional derivatives trading. Going forward, the exchange plans to upgrade to dYdX v4., which aims to completely decentralize order-matching mechanisms and become fully community-governed.

Serum

Serum DEX is another key player in professional DEX crypto exchange and dYdX’s nearest rival. Serum is based on the Solana blockchain, which has been known for its astronomic transaction throughput and near-nonexistent fees. Serum taps into these strengths and provides a full set of tools for professionally analyzing DeFi market conditions, as well as flexible order execution options. Serum offers an on-chain order book matching algorithm, meaning that all traders are executed directly by smart contracts. The execution is near-instant, making the order matching comparable to top CEXes.

Serum also cures one of the biggest headaches in DeFi – namely, cross-chain functionality. Although based on Solana, Serum can match orders across a multitude of networks, including Ethereum, and also supports wrapped tokens. This makes asset coverage of the potential trader near-infinite – as broad as DeFi itself – while offering the ease and convenience of professional CEX crypto exchanges.

1inch

Speaking of professional DeFi trading, you can’t gloss over 1inch, one of the cornerstones of today’s best-decentralized crypto exchange scene. 1inch serves primarily as an aggregator, building routes for the most efficient trade execution across various DEXes. It pulls together liquidity from multiple DEXes, thus ensuring the best rates and the fastest trades.

Also, it offers a limit order protocol, wherein traders can set complex conditions and dynamic price criteria for the execution of their trades – features also usually met on centralized exchanges. Like Serum, 1inch offers a swift cross-chain protocol called Fusion+, which allows for seamless and near-instant cross-chain swaps.

However, what truly sets 1inch apart is its Request for Quote (RFQ) system. It allows major market makers to tap into liquidity from centralized exchanges and inject it into DEX trades. Thus, liquidity for decentralized traders, particularly large-scale ones, is boosted by centralized sources.

Loopring

Loopring is another notable DEX aggregator with CEX-grade features. Using the zxRollups technology, Loopring offers the speed and efficiency that is most often associated with centralized top crypto trading platforms. Loopring’s standout feature is on-chain transaction settlement. That is, all trades are processed off-chain, but are settled on-chain. This frees up a huge amount of throughput for the network, allowing for more traders to be processed at a fraction of the gas fee.

Like the other standout hybrids mentioned above, Loopring offers direct integration with centralized liquidity. This allows dex crypto exchange users to tap into CeFi liquidity pools seamlessly while remaining completely anonymous and in control of their funds. Also, Looprig offers swift cross-chain trading, which, once again, opens up infinite pastures for short-term trading and arbitrage.

Takeaway

Needless to say, this hybrid model is set to make servious waves in worldwide trading. What has been the biggest issue of CEX crypto exchanges? They’re regulated and require KYC. What are the main sores of a DEX platform? You have to figure out smart contracts and self-custody before you dive in. Top crypto trading platforms combining the best of both worlds will serve as an invaluable medium is bridging the gap between DeFi and CeFi. Naturally, we can expect this model to gain traction in the upcoming years. Who wouldn’t like the to get both a CEX and a DEX under one roof? Nowadays, it’s not a “what if?” but a “can do!”.