Understanding the differences between centralized (CEX) and decentralized (DEX) exchanges is important for every trader and investor.
🔄 Centralized exchanges (CEX)
Examples: Binance, Bybit, Kraken, Coinbase
📌 Features:
Managed by a single company
Users create an account and store funds on the exchange
Trading goes through the internal order book
✅ Pros:
🔹 High liquidity and volumes
🔹 Simple interface, user-friendly for beginners
🔹 Fiat gateways (purchase with card/bank)
🔹 Trading tools: margin, derivatives, stop orders
🔹 Support and service
❌ Cons:
🔸 Risks of hacking and loss of funds
🔸 Require KYC (passport, verification)
🔸 You do not give yourself full control over the funds
🔸 Censorship and possible blocks (by countries or IP)
🧩 Decentralized exchanges (DEX)
Examples: Uniswap, PancakeSwap, 1inch, dYdX (partially)
📌 Features:
Without a single point of control
Users trade directly from their wallet (MetaMask, TrustWallet, etc.)
Uses smart contracts and AMM (automated market maker)
✅ Pros:
🔹 Full control over funds (you do not send them to the exchange)
🔹 Anonymity — no KYC needed
🔹 Free access to tokens before listing on CEX
🔹 Available 24/7, independent of central servers
❌ Cons:
🔸 Lower liquidity (especially for rare tokens)
🔸 High fees (e.g., on the Ethereum network)
🔸 Risk of interacting with fake/scam tokens
🔸 No support: if you make a mistake — no one will help
🔸 Limited trading features (no complex orders, margin, etc.)
🧭 When to use CEX and when to use DEX?
Scenario Preference
Buying crypto for fiat ✅ CEX (more convenient, faster)
Storing large amounts ❌ Better not on CEX (smart wallet or cold storage)
Trading new tokens ✅ DEX (they may not yet be added on CEX)
Frequent trading with instruments (futures, margin) ✅ CEX
Anonymity and control ✅ DEX
Participation in DeFi (farming, staking, swaps) ✅ DEX
Security (when able to handle the wallet) ✅ DEX, but with caveats