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Centralized exchanges vs. decentralized exchanges in cryptocurrency markets: A systematic literature review

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  • Sascha Hägele

    (Saarland University)

Abstract

Research on cryptocurrency exchanges, consisting of both centralized exchanges (CEXs) and decentralized exchanges (DEXs), has seen a significant increase in contributions in recent years, driven by growing interest in the conceptual design of cryptocurrency markets. Through a comprehensive review of literature published between January 2019 and September 2023, I identify and analyze different dimensions of the ongoing CEX vs. DEX debate. While DEXs emphasize decentralization, user control, and resistance to censorship, CEXs offer higher liquidity, advanced trading features, and a more established track record. Regulatory challenges, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance, also feature prominently in the literature and influence the choice of exchange for both traders and policymakers. In addition, I observe a growing interest in the design of pricing functions for CEXs and DEXs, particularly in the area of automated market makers (AMMs). Finally, based on my findings, I outline future research opportunities in this context and derive research gaps as well as recommended actions for practitioners.

Suggested Citation

  • Sascha Hägele, 2024. "Centralized exchanges vs. decentralized exchanges in cryptocurrency markets: A systematic literature review," Electronic Markets, Springer;IIM University of St. Gallen, vol. 34(1), pages 1-21, December.
    • Handle: RePEc:spr:elmark:v:34:y:2024:i:1:d:10.1007_s12525-024-00714-2
    DOI: 10.1007/s12525-024-00714-2
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    More about this item

    Keywords

    Automated market maker; Cryptocurrency; Decentralized exchanges; Systematic literature review;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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