#CEXvsDEX101 What’s the Difference?
🔁 Quick Definition
CEX (Centralized Exchange): A company-run platform where users trade crypto through a central authority (e.g., Binance, Coinbase).
DEX (Decentralized Exchange): A peer-to-peer platform that lets users trade directly from their wallets using smart contracts (e.g., Uniswap, PancakeSwap).
1. 🧑⚖️ Control
Feature CEX DEX
Custody Platform holds your crypto You keep control of your wallet
KYC Required? Yes (ID checks, AML laws) Often No
Centralized? Yes No
2. ⚙️ How They Work
CEX:
Acts like a bank or brokerage.
Holds user funds and matches buy/sell orders in an order book.
Fast and user-friendly.
DEX:
Runs on blockchain via smart contracts.
Uses liquidity pools instead of order books.
You sign transactions directly from your wallet (e.g., MetaMask).
3. 🛡️ Security & Risk
Category CEX DEX
Hacks Target for large hacks Smart contract bugs, but no honeypot
Custody Risk Platform can freeze/lose funds No one can access your funds but you
User Control Lower Higher
4. 💰 Fees & Speed
Factor CEX DEX
Fees Often lower, but vary Gas fees (ETH can be expensive)
Speed Very fast Slower due to blockchain confirmation
5. 🔓 Pros & Cons Summary
✅ CEX Pros:
User-friendly for beginners
Faster trades
High liquidity
Customer support
❌ CEX Cons:
Requires KYC
Centralized (can be censored or hacked)
You don’t fully own your crypto
✅ DEX Pros:
Full control of your funds
Privacy (no KYC)
Permissionless (anyone can use it)
❌ DEX Cons:
More complex UI
Gas fees can be high
Risk of bad tokens or scams
⚖️ When to Use Which?
Situation Use CEX or DEX?
You're new to crypto ✅ CEX
You want full control/privacy ✅ DEX
You need to cash out to fiat ✅ CEX
You’re swapping tokens on Ethereum ✅ DEX
You're concerned about government access ✅ DEX
📌 TL;DR
Feature CEX DEX
Custody You trust the platform You control your keys
ID Needed? Yes Often no
Ease of Use Easier More technical
Liquidity Higher Varies
