CFA Level I · CFA Level I Exam · Introduction to Digital Assets
Compared with a centralized exchange, a decentralized exchange (DEX) that uses smart contracts most likely:
A decentralized exchange most likely lets users trade directly from their own wallets through smart contracts, with no intermediary holding their assets. Centralized exchanges, by contrast, custody client assets and run a central order book operated by one firm.
- Aholds client assets in omnibus accounts
- Ballows users to trade from their own wallets without an intermediaryCorrect
- Crelies on a central order book run by a single firm
Explanation
A DEX runs on smart contracts so users keep control of their private keys and trade peer to peer from their wallets. Holding assets in omnibus accounts and operating a central order book are features of centralized exchanges.
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