Tacen 101 – hDEX vs CEX vs DEX – what’s the difference?
February 2, 2023
If you’re following Tacen, or Project TXA, then you’ve probably heard us talk about our hybrid decentralized exchange (hDEX) before. To recap:
Our partners at Project TXA are building a Decentralized Settlement Layer for Tacen’s new generation of DEXs, called the Hybrid-Decentralized Exchange, or hDEX. Project TXA is creating a revolutionary network of open-source, community operated Settlement Data Providers (SDPs), which are nodes for cross-chain settlement, that will process transactions on this Decentralized Settlement Layer (DSL).
Project TXA is composed of a Decentralized Settlement Layer (DSL) and Cross-chain Settlement Protocol (CSP). Any exchange that operates on top of the TXA Decentralized Settlement Layer must conform to the Cross-chain Settlement Protocol (CSP). For simplicity, such exchange conforming to CSP will be called a Participant Exchange (PE).
The Participant Exchange operates a trust-minimized orderbook and interfaces with a Decentralized Settlement Layer, thereby combining the performance and efficiency of a centralized service while minimizing trust requirements from participating traders. The hDEX being built by us at Tacen, called Tacen Exchange, will be the flagship example of how a participating exchange using Project TXA’s DSL, while conforming to the CSP, offers cryptocurrency traders with the highest quality trading experience possible.
Essentially, that means we’ve found the perfect blend of the convenience offered by a CEX, with the security offered by a DEX. If you’ve been in crypto for any substantial amount of time, then you probably understand how groundbreaking that is.
HDEX VS CEX VS DEX – WHAT’S THE DIFFERENCE?
Rather than write long-form content explaining all of the differences, we think it would be more helpful to just give you the quick facts in a series of comparisons between Tacen’s hDEX and leading CEX and DEX options.
ORDER MATCHING SPEEDS
CEX = about 5 ms hDEX= 5-6 ms DEX = 400ms – 30 sec
SELF-CUSTODY OF ASSETS
CEX = impossible, traders lose access to their keys, crypto is held by a custodian hDEX = traders maintain custody of their keys DEX = traders maintain custody of their keys
CEX = fees for depositing, trading, withdrawing, and more. Sum can exceed 10%. hDEX = order matching fee is about 0.1% per trade. DEX = usually only order matching fees
CEX = uses an off-chain order book to allow cross-chain trading and less gas fees. hDEX = uses a centralized orderbook and collateral funds off-chain to add speed and lower gas fees. DEX = use on-chain orderbooks, which leads to high gas prices and slow transaction times.
CEX = Traders are required to go through standard KYC processes to trade. hDEX = No KYC required, simply connect a wallet to trade. DEX = No KYC required, simply connect a wallet to trade.
CEX = Many CEXs offer a fiat on-ramp, which is facilitated by their KYC protocols. hDEX = No fiat on-ramp currently. DEX = DEXs typically are only crypto-to-crypto exchanges.
Cross-Chain Trading CEX = CEXs usually can offer cross-chain trading. hDEX = Tacen allows cross-chain trading (like a CEX) while allowing self-custody of crypto (like a DEX). DEX = Most DEXs are tied to one chain, rendering cross-chain trading typically impossible.
As you can see, Tacen Exchange is a trading experience that is simply unparalleled anywhere else. There are many more comparisons that we can make between CEXs, our hDEX, and DEXs, but we think you get the picture.
New to Tacen and wanting to learn what it’s all about? Be sure to follow us on Twitter to catch the latest updates and join our Discord community to meet the team and make friends. We love to give crypto to our community, and staying active on our Twitter and in our Discord server are the best ways to be the first in line.