FUNCTIONAL FEATURES OF CENTRALIZED AND DECENTRALIZED CRYPTOCURRENCY EXCHANGES

Abstract

The article examines the functional characteristics of centralized (CEX) and decentralized (DEX) cryptocurrency exchanges, which play a key role in the operation of the digital economy. The architectural, organizational, and technological aspects of various types of exchanges are analyzed, with their advantages and limitations identified in terms of usability, security, liquidity, regulatory compliance, and availability of trading instruments. It is noted that centralized exchanges offer high order execution speed, extensive functionality, integration with payment infrastructure, and user support. At the same time, they require identity verification, store assets in internal accounts, and are therefore subject to certain risks of centralized control. In contrast, decentralized exchanges operate on the basis of smart contracts, do not store user assets, and do not require KYC procedures, thus ensuring a high level of anonymity. However, DEX platforms are characterized by lower liquidity, a limited range of order types, and a higher requirement for users’ technical competence. The study presents a comparative analysis of trading volumes for key cryptocurrencies on Binance, Bybit, and Coinbase Exchange, as well as on decentralized platforms such as Uniswap, PancakeSwap, and Curve. The results reveal a significant lag in trading volume on DEX compared to centralized platforms. Among the analyzed cryptocurrencies, Ethereum demonstrates the highest daily trading volume on both centralized and decentralized exchanges. The study also focuses on user and asset security on cryptocurrency exchanges. It provides a detailed analysis of the use of two-factor authentication (2FA) mechanisms, customer identification procedures (KYC), and anti-money laundering and counter-terrorist financing (AML/CFT) policies. These tools are an integral part of the infrastructure of centralised exchanges that seek to comply with financial regulations and increase user trust. Based on the conducted analysis, the article outlines the prospects for the development of hybrid exchange models that combine the advantages of centralization and decentralization, and defines directions for further research aimed at enhancing the efficiency, security, and accessibility of digital trading platforms. Keywords: cryptocurrency exchange, centralised exchange, decentralised trading platform, digital security, KYC, DEX, CEX.