### Centralized vs. Decentralized Exchanges: Your Quick Guide to
#CEXvsDEX101 Differences at a Glance
| Aspect | Centralized Exchange (CEX | Decentralized Exchange (DEX) |
|--------------------------|--------------------------------------|----------------------------------------|
| Custody | Funds held by a 3rd party (the exchange). | Users retain full custody (self-custody via wallets). |
| Control | Managed by a company (e.g., Binance, Coinbase). | Algorithmic; runs on smart contracts (e.g., Uniswap, PancakeSwap). |
| Transparency | Limited; internal order books. | Fully transparent; on-chain transactions. |
| Speed | Faster (off-chain matching). | Slower (on-chain settlement). |
| KYC/Privacy | Mandatory KYC. | Anonymous; no KYC. |
| Fiat Integration | Supports fiat deposits/withdrawals. | Crypto-only (rare fiat support). |
✅ Pros & Cons
| CEX | DEX |
| ✅ Pros | ✅ Pros|
| • High liquidity (deep order books).<br>• **User-friendly** (simple UI, customer support).<br>• **Advanced tools** (futures, staking, fiat ramps). | • **Self-custody** (no counterparty risk).<br>• **Permissionless** (global access).<br>• **Censorship-resistant** (no central authority). |
| ❌ Cons | ❌ Cons |
| • Hack targets (custodial risk, e.g., Mt. Gox).<br>• **KYC requirements** (privacy trade-off).<br>• **Regulatory exposure** (restrictions per jurisdiction). | • **Lower liquidity** for niche tokens.<br>• **Complex UX** (gas fees, wallet setup).<br>• **Irreversible errors** (no customer support). |
🎯 When to Use Each
- Prefer CEX if you:
- Are a **beginner** (easy onboarding).
- Trade **high volume** or need **fiat conversions**.
- Use **advanced derivatives** or earn interest via **staking**.
- Value **speed** for arbitrage or day trading.