Crypto Exchange

A crypto exchange is a platform where users can buy, sell, and exchange crypto assets. Depending on its architecture, an exchange may be centralized or decentralized and may support spot trading, margin trading, futures trading, and other derivatives.

A centralized exchange normally holds user funds through its exchange wallets and maintains internal account balances. Trading orders are processed through order matching, while the matching engine finds compatible buy and sell orders. A decentralized exchange instead relies on smart contracts and blockchain infrastructure to execute trades without traditional centralized custody.

Main functions of a crypto exchange

• buying and selling crypto assets;
• exchanging one coin or token for another asset;
• placing market orders and limit orders;
• depositing and withdrawing funds;
• holding assets within exchange infrastructure;
• providing market data such as order books, trading volume, and prices.

When using an exchange, users need to consider trading fees, withdrawal fees, market liquidity, spread, and possible slippage. Centralized exchanges may also require KYC and AML procedures.