Centralized exchanges and decentralized exchanges are the two main types of cryptocurrency trading. Below is a comparison of them:

Centralized Exchange

• Operation: There is a central institution responsible for matching transactions, users deposit funds into the exchange wallet, and the exchange performs order matching and asset transfer during trading, such as Binance, Huobi, etc.

• Advantages: Good trading experience, user-friendly interface, good trading depth, strong liquidity, and a professional customer service team.

• Disadvantages: There is a risk of single point of failure; if the exchange suffers from a hacker attack, poor internal management, or other issues, the safety of user funds is at risk. At the same time, users need to trust the exchange, and trading is greatly influenced by regulation.

Decentralized Exchange

• Operation: Based on blockchain technology, trading is realized through smart contracts, user funds are stored in their own wallets, and transactions are conducted directly between users, such as Uniswap, PancakeSwap, etc.

• Advantages: Secure, users hold private keys, and fund safety is controlled by themselves. Transparent, trading records can be checked on the blockchain. In addition, it is not controlled by centralized institutions, providing greater autonomy and resistance to censorship.