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CEX-DEX arbitrage

CEX-DEX arbitrage: how it works

Price gaps between centralized order books and on-chain AMM pools — and how to capitalize on them.

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What is CEX-DEX arbitrage?

Centralized exchanges (CEX) like Binance or OKX match buy and sell orders in a traditional order book. Decentralized exchanges (DEX) — Uniswap, PancakeSwap, Raydium — use automated market makers (AMM): liquidity pools with a constant-product formula that reprices automatically after every trade.

Because the two systems are independent, their prices diverge every time a large order moves one side but not the other. Institutional market makers exploit these gaps in milliseconds using automated bots — but meaningful windows of 0.3–2% appear regularly enough for smaller participants too.

How a trade works

  1. 1 Spot the spread: our scanner shows CEX price vs. best DEX pool price, net of fees.
  2. 2 Withdraw from CEX to your wallet (MetaMask, Phantom…). This is an on-chain transaction — gas applies.
  3. 3 Swap on the DEX. The pool charges a fee (typically 0.05–0.30%). Slippage adds to cost on large orders.
  4. 4 Send back to CEX or hold. Second on-chain transfer if you plan to cycle back.

All costs to account for

  • CEX withdrawal fee — fixed per coin, shown in exchange settings.
  • Network gas — varies by chain and congestion. ETH mainnet can be $0.50–$5 per swap; Arbitrum, Optimism, BSC, and Solana are cents.
  • DEX pool fee — 0.05% to 0.30% depending on pool tier.
  • Slippage — on-chain price moves while your tx is in the mempool. Set a tight slippage tolerance.
  • CEX bid-ask spread — the price you actually fill at vs. the mid price.

Quick net-profit formula

Net profit = (DEX price − CEX price) × amount − CEX withdrawal fee − gas cost − DEX fee × amount − slippage

Risks

  • Latency: the spread may close before your withdrawal confirms. On-chain finality takes 15 s to several minutes.
  • Gas spikes: network congestion can multiply gas cost × 5–20× within seconds.
  • Slippage: large swaps move the pool price against you.
  • CEX delays: withdrawal queues and processing times vary.
  • Regulatory: always trade with funds you own on fully compliant accounts.
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