#TradingTypes101 # Trading Types 101: Understanding Different Exchange Models

## Centralized vs. Decentralized Exchanges (CEX vs. DEX)

Cryptocurrency trading primarily occurs on two types of platforms: **Centralized Exchanges (CEXs)** and **Decentralized Exchanges (DEXs)**. Here's a breakdown of their key differences:

### Centralized Exchanges (CEXs)

- **Operated by** a single company/organization (e.g., Coinbase, Binance, Kraken)

- **How they work**:

- Act as intermediaries between buyers/sellers

- Use order books to match trades

- Hold users' funds in custodial wallets

- **Key features**:

- User-friendly interfaces

- High liquidity

- Fiat currency support

- Customer support

- Requires KYC/AML verification

- **Security risks**: Vulnerable to hacks (e.g., Mt. Gox, FTX collapse)

### Decentralized Exchanges (DEXs)

- **Operated by** smart contracts on blockchain (e.g., Uniswap, PancakeSwap)

- **How they work**:

- Peer-to-peer trading via Automated Market Makers (AMMs)

- Users connect personal wallets (no custodial holdings)

- All transactions on-chain

- **Key features**:

- No KYC requirements

- Full user control of funds

- Access to new/niche tokens

- Lower fees (but gas costs apply)

- Censorship-resistant

- **Challenges**:

- Steeper learning curve

- Lower liquidity for some tokens

- Smart contract risks

## Other Trading Types and Features

1. **Spot Trading**: Immediate purchase/sale of assets at current prices (available on both CEXs and DEXs)

2. **Derivatives Trading**:

- Futures, options,#ElonMuskDOGEDeparture