Imitation, they say, is the sincerest form of flattery. Thus, centralized exchanges shouldn’t take umbrage at the fact that DEXs have been copying all their best features. It’s a sign that when it comes to crypto trading, CEXs have gotten a lot right. From order books to advanced order types and from onboarding to user experience (UX), centralized exchanges have long been in the lead.
But the distance between them and their decentralized counterparts is diminishing now that DEXs are rapidly incorporating all their best features. In doing so, however, they’re not simply recreating CEXs on blockchain rails – rather, they’re using them to enhance the core competencies DEXs possess and which CEXs can’t emulate including self-custody, universal access, and exposure to new tokens from the moment they launch.
As a result of this gradual migration of CEX features to DEX protocols, decentralized platforms now look very much like centralized exchanges on the surface. But underneath the hood, their architecture remains quite different.
Copying One Another’s Homework
For years, centralized and decentralized exchanges have been copying each other’s homework. CEXs have introduced Layer 1 staking, yield farming, and even stolen the term “DeFi” to reimagine it as “CeDeFi,” a name which may not sound particularly compelling but works surprisingly well. CEXs have also incorporated prediction markets and token launchpads, innovations that started life onchain.
In return, DEXs have adopted many of the best features that CEXs have to offer, particularly when it comes to onboarding and order execution as the following examples show.
Adding Advanced Order Types
Stop-loss and take-profit are features you’d expect to find on a centralized exchange but which, until recently, were almost entirely absent from onchain exchanges. This is due to the complexities associated with integrating these features into AMMs, which are optimized for instant swaps – not for setting complex orders that execute at a specific time and price point.
Orbs, for instance, has recently released its dSTLP protocol, allowing any exchange to bolt on decentralized stop-loss and take-profit orders, eliminating the obligation to rewrite their code from scratch. Instead, Orbs’ Layer 3 takes care of order execution without the need for DEXs to rely on bots, scripts, or centralized off-chain infrastructure.
This setup works well for DEXs and DEX traders alike. The former benefit from instant support for advanced order types without needing to rewrite their smart contracts, complete with the underlying risk and development time this entails. The latter, meanwhile, get to set the order types they’re accustomed to using on CEXs while taking advantage of self-custody and no KYC.
Order Book Trading
Order books, meanwhile, have also been added by DEXs, slowly at first ,with dYdX one of the first to take the plunge, but then with increased rapidity. The success of Hyperliquid’s onchain perps exchange is thanks in no small part to its ability to implement an order book that looks and feels just like something you’d find on Binance or OKX.
While the order book model isn’t required for simple AMMs delivering token swaps, it’s extremely powerful when integrated into more sophisticated DEXs. Here, it enables maker and taker orders to be set while making it easier for market makers to supply liquidity and profit from the spread between the two.
Account Abstraction
Ordinarily, before you can start trading on a decentralized protocol, you need to create a web wallet and back up the private key. This is fine for experienced onchain users, many of whom juggle multiple web wallets to access chains ranging from Ethereum to Solana. But it’s daunting for beginners, who have no experience of private keys and are at risk of failing to back up their wallet or resorting to suboptimal key storage, both of which can lead to loss of funds.
The anxiety of managing seed phrases and the friction of paying gas fees has kept many users glued to their CEX accounts where the onboarding is familiar, requiring just email and password authentication. Account abstraction is the feature that finally bridges this gap. Through transforming cryptocurrency wallets into “Smart Accounts,” account abstraction allows DEXs to offer social login, using a Google account instead of a seed phrase, and to subsidize gas, allowing users to get started using stablecoins.
Equally importantly, account abstraction lets DEXs build the sort of “sticky” UX that CEXs depend on. Wallets can now support one-click trading, automated approvals, batched swaps, and session keys that allow temporary delegated actions without giving up custody. It isn’t quite Binance-level ease of use, but it’s much closer than DeFi has ever been. And it’s a reminder that, as onchain infrastructure matures, what once required a centralized interface can now be orchestrated entirely by smart contracts.
RFQ Engines
While order books cater to active traders, they aren’t always the most efficient mechanism for swapping with size. On centralized exchanges, institutional whales don’t dump millions into the order book and suffer massive slippage. Instead, they use OTC desks to get a guaranteed price quote. And yep, DEXs are now replicating this too via Request-for-Quote (RFQ) engines.
Unlike AMMs which rely on the rigid x*y=k formula, RFQ systems allow traders to request a specific price from professional market makers off-chain, which is then cryptographically signed and settled onchain.
Hashflow is a prime example of this model in action. It connects traders directly with market makers, complete with zero slippage and protection from Maximum Extractable Value (MEV) exploits such as sandwich attacks. Similarly, UniswapX has adopted a dutch-auction mechanism that effectively functions as an RFQ hybrid, outsourcing the complexity of routing and gas costs to third-party “fillers” who compete to deliver the best execution price.
Conditional Order Logic
Perhaps the biggest gap between CEXs and DEXs has been the ability to use “set and forget” trading strategies. Centralized platforms have long catered to algorithmic traders with conditional orders using logic that dictates “if this happens, do that.” DeFi protocols are now introducing this sophisticated logic through “intents” and smart contract automation. This allows sophisticated buy, sell, and take-profit strategies to be executed over time.
CoW Protocol, for instance, has popularized TWAP (Time-Weighted Average Price) orders, allowing users to break a large order into smaller parts executed over a set period. This minimizes price impact and is a strategy previously reserved for trading desks. Meanwhile, on Solana, Jupiter has seamlessly integrated Dollar Cost Averaging (DCA) directly into its swap interface, allowing users to automate recurring purchases. These conditional logic features prove that DEXs can offer the same autopilot convenience as their centralized rivals without requiring users to forgo self-custody.
The Endgame
Given this confluence of trends, it may appear that DEXs are simply chasing CEX parity. Order books, RFQs, conditional orders, and account abstraction, after all, are features that CEX users have enjoyed equivalents of for years. But beneath the surface, something more fundamental is happening.
As CEXs and DEXs draw level, gaining a verisimilitude that can make it hard to distinguish which is which on first glance, users are finally able to choose without factoring in trade-offs. If you favor the privacy and self-custody of DEXs, you don’t have to sacrifice speed or advanced order types in the process. If you prefer custodial design, which outsources security and storage to a reputable CEX, you can do so while still accessing decentralized innovations such as staking and prediction markets.
Centralized exchanges once had an unassailable lead in UX and execution, but today DEXs can almost match them. As decentralized exchanges adopt RFQ engines for better pricing and conditional logic for better strategy, they’re systematically removing the advantages once held by centralized incumbents. The result is a new generation of DEXs that look and feel like the centralized exchanges of old while maintaining the self-sovereignty that is DeFi’s core value proposition. And that’s one feature CEXs can never steal.
