#CEXvsDEX101
First: What is a Centralized Exchange (CEX)?
These are platforms managed by a company or central authority, such as Binance, Coinbase, and Kraken. These platforms require users to create an account, verify their identity (KYC), and deposit their funds into the platform's wallets.
Advantages:
User-friendly interface
High liquidity and fast execution of trades
Technical support and security backup (sometimes)
Advanced tools for professionals (such as margin trading)
Disadvantages:
Loss of complete control over assets
Risk of hacks
Dependence on a central authority
Strict regulatory constraints
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Second: What is a Decentralized Exchange (DEX)?
These are platforms that rely on smart contracts and operate without a central authority, such as Uniswap, PancakeSwap, and dYdX. Trading occurs directly between wallets, without the need to deposit funds into the platform.
Advantages:
Full control over assets (Non-Custodial)
High privacy (often without KYC)
Resistance to government censorship
Open source and transparent
