Exploring Centralized and Decentralized Cryptocurrency Exchanges - Analyzing ETH Token Trading on Centralized and Decentralized Cryptocurrency Exchanges

Disclaimer: This article is a final deliverable from Prof. Luyao Zhang’s project entitled “From ‘Code is Law’ to ‘Code and Law’: A Comparative Study on Blockchain Governance,” supported by the 2023 Summer Research Scholarship (SRS) program at Duke Kunshan University. SciEcon wholeheartedly supports DKU’s noble mission of advancing interdisciplinary research and fostering integrated talents. Our support is solely focused on promoting academic excellence and knowledge exchange. SciEcon does not seek any financial gains, property rights, or branding privileges from DKU. Moreover, individuals involved in this philanthropy event perform their roles independently at DKU and SciEcon.

Read the article on Medium: https://medium.com/sciecon-innovate/dynamics-of-centralized-and-decentralized-cryptocurrency-exchanges-83f777023609

Project information

• Author: Xintong Wu, Computation and Design, Class of 2025, Duke Kunshan University
• Instructor: Prof. Luyao Zhang, Duke Kunshan University
• Acknowledgments: My sincere appreciation to SciEcon Insights and its directors: Prof. Luyao Zhang, Xinyu Tian, Wanlin Deng, and Zesen Zhuang. Also thanks to Yutong Quan for the peer evaluation.
• Project Summary: This project takes the ETH token as an example. It selects two months before and after the FTX collapse as the time nodes to analyze the transaction indicators such as transaction volume (in USD), transaction fees, and transactions in CEX and DEX, investigate the correlation between the indicators, explore users' preference for CEX and DEX, and provide the development direction for future cryptocurrency exchanges. First, this research analyzed the ETH token flow of CEX and DEX, considering the migration in both inflow and outflow directions, and presented the changes of each transaction indicator over time by drawing a graph. Then, it performed the correlation test and Granger causality test (Engle and C. W. J. Granger 1987) (Ante and Saggu 2023) for the data analysis of the trading indicators therein. Also, the analysis of liquid trading between CEX and DEX focused on the changes in trading indicators before and after the FTX collapse incident. Finally, it summarizes the above findings, provides a comprehensive overview of CEX and DEX transactions, and analyzes the future direction of cryptocurrency exchanges, thus proposing a possible collaborative system between centralized and decentralized finance. (Qin et al. 2021). This study helps users understand the cryptocurrency market better and supports informed decision-making by examining the trends between the CEX and DEX platforms and their distribution.

Table of Contents

• Data
• Code
• Spotlight
• More about the Author
• References

Data

• Data Source: https://flipsidecrypto.xyz/

Meta Data Infomation

Data Files	Data Type	Data Content
cex_inflow	Queried_Data	CEX inflow data
cex_outflow	Queried_Data	CEX outflow data
dex_inflow	Queried_Data	DEX inflow data
dex_outflow	Queried_Data	DEX outflow data
cex_to_dex_query	Queried_Data	CEX to DEX flow data
dex_to_cex_query	Queried_Data	DEX to CEX flow data
cex_process	Processed_Data	CEX's total transaction data
dex_process	Processed_Data	DEX's total transaction data

Data Dictionary

File Name	Variable Name	Description	Frecuency	Unit	Type
cex_inflow	Date	date	daily	1 day	int
	USD_VOLUMES	transaction volumes	daily	USD	float
	FEES	transaction fees	daily	USD	float
	TOTAL_TRANSACTIONS	transaction	daily	1	int
cex_outflow	Date	date	daily	1 day	int
	USD_VOLUMES	transaction volumes	daily	USD	float
	FEES	transaction fees	daily	USD	float
	TOTAL_TRANSACTIONS	transaction	daily	1	int
dex_inflow	Date	date	daily	1 day	int
	USD_VOLUMES	transaction volumes	daily	USD	float
	FEES	transaction fees	daily	USD	float
	TOTAL_TRANSACTIONS	transaction	daily	1	int
dex_outflow	Date	date	daily	1 day	int
	USD_VOLUMES	transaction volumes	daily	USD	float
	FEES	transaction fees	daily	USD	float
	TOTAL_TRANSACTIONS	transaction	daily	1	int
cex_to_dex_query	Date	date	daily	1 day	int
	NUM_USERS	the number of users	daily	1	int
	TOTAL_USD_VOLUMES	total transaction volumes	daily	USD	float
	TOTAL_FEES	total transaction fees	daily	USD	float
	TOTAL_TRANSACTIONS	total transactions	daily	1	int
dex_to_cex_query	Date	date	daily	1 day	int
	NUM_USERS	the number of users	daily	1	int
	TOTAL_USD_VOLUMES	total transaction volumes	daily	USD	float
	TOTAL_FEES	total transaction fees	daily	USD	float
	TOTAL_TRANSACTIONS	total transactions	daily	1	int
cex_process	Date	date	daily	1 day	int
	USD_VOLUMES	transaction volumes	daily	USD	float
	FEES	transaction fees	daily	USD	float
	TOTAL_TRANSACTIONS	transaction	daily	1	int
dex_process	Date	date	daily	1 day	int
	USD_VOLUMES	transaction volumes	daily	USD	float
	FEES	transaction fees	daily	USD	float
	TOTAL_TRANSACTIONS	transaction	daily	1	int

Code

• Query Code Source: https://flipsidecrypto.xyz/emi/uni-token-cex-dex-transactions-6nQXQJ

Code Dictionary

File name	Type
cex_query	Query_data
dex_query	Query_data
process_data	Process_data
cex_analyze	Analyze_data
dex_analyze	Analyze_data
cex_dex_compare	Analyze_data

Spotlight

-Mind map

Figure No.1 Mind map of the article

• Decision tree

Figure No.2 Decision tree of the article

• Finding

Figure No.3 Findings of the article

• Figures

Figure No.4 CEX Visulization

Figure No.5 DEX Visulization

Figure No.6 CEX and DEX flow

More about the Author

• Bio Xintong Wu is a student in the Class of 2025 at Duke Kunshan University, majoring in Computing and Design. Her interested research areas are digital design, digital market research, and metaverse. She hopes to delve into the dynamic interactions between technology and society in the future Web 3.0 era and explore the infinite possibilities that technology can bring. Through the research with Prof. Luyao Zhang, she hopes to create new digital virtual worlds that are decentered, interdisciplinary, and have infinite possibilities.

References

Data Source

• https://flipsidecrypto.xyz/

Code Source

• https://flipsidecrypto.xyz/emi/uni-token-cex-dex-transactions-6nQXQJ

Literature

• Ante, Lennart, and Aman Saggu. 2023. “Time-Varying Bidirectional Causal Relationships between Transaction Fees and Economic Activity of Subsystems Utilizing the Ethereum Blockchain Network.” SSRN Electronic Journal 29. https://doi.org/10.2139/ssrn.4400040.

• Engle, Robert F., and C. W. J. Granger. 1987. “Co-Integration and Error Correction: Representation, Estimation, and Testing.” Econometrica 55 (2): 251–76. https://doi.org/10.2307/1913236.

• Qin, Kaihua, Liyi Zhou, Yaroslav Afonin, Ludovico Lazzaretti, and Arthur Gervais. 2021. “CeFi vs. DeFi -- Comparing Centralized to Decentralized Finance.” ArXiv:2106.08157 [Cs, Q-Fin], June. https://arxiv.org/abs/2106.08157.

@article{ante2023time,
  title={Time-Varying Bidirectional Causal Relationships between Transaction Fees and Economic Activity of Subsystems Utilizing the Ethereum Blockchain Network},
  author={Ante, Lennart and Saggu, Aman},
  journal={Available at SSRN 4400040},
  year={2023}
}

@article{engel1987cointegration,
  title={Cointegration and error correction: Representation, estimation and testing},
  author={Engel, Robert F},
  journal={Journal of econometrics},
  volume={55},
  pages={251--276},
  year={1987}
}

@article{qin2021cefi,
  title={CeFi vs. DeFi--Comparing Centralized to Decentralized Finance},
  author={Qin, Kaihua and Zhou, Liyi and Afonin, Yaroslav and Lazzaretti, Ludovico and Gervais, Arthur},
  journal={arXiv preprint arXiv:2106.08157},
  year={2021}
}