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Onchain Economics
DeFi Primitives

Centralized Exchange(CEX)

A cryptocurrency exchange operated by a company that holds custody of user funds and maintains order books.

In-Depth Explanation

CEXs like Coinbase, Binance, and Kraken offer familiar trading interfaces, fiat on-ramps, and typically better liquidity than DEXs. The tradeoff is counterparty risk—users don't control their keys. Exchange failures (FTX, Mt. Gox) demonstrate why 'not your keys, not your coins' remains relevant advice.

Related Terms

Decentralized Exchange

DEX

A cryptocurrency exchange that operates through smart contracts without a central authority or custody of user funds.

Know Your Customer

KYC

Identity verification requirements that financial institutions must perform to prevent fraud and money laundering.

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Automated Market Maker

AMM

A smart contract that provides liquidity and enables trading using a mathematical formula instead of an order book.

Liquidity Pool

LP

A smart contract holding paired assets that enables trading, lending, or other DeFi activities.

Collateralized Debt Position

CDP

A loan where users deposit collateral to mint or borrow assets, with liquidation risk if collateral value falls.

Lending Protocol

A DeFi application that matches lenders with borrowers through smart contracts, enabling permissionless borrowing and lending.

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