  We compare the market quality of centralized crypto exchanges (CEXs) such as
Binance and Kraken to decentralized blockchain-based venues (DEXs) such as
Uniswap v2 and v3. After discussing the microstructure of such exchanges, we
analyze two key aspects of market quality: transaction costs and deviations
from the no-arbitrage condition. We find that CEXs and DEXs operate on roughly
equal footing in terms of transaction costs, particularly in light of recent
innovations in DEX protocols. Moreover, while CEXs provide superior price
efficiency, DEXs eliminate custodian risk. These complementary advantages may
explain why both market structures coexist.
