The differences between CEX (Centralized Exchange) and DEX (Decentralized Exchange) are quite fundamental, as both have different ways of working, advantages, and disadvantages. Here is the explanation:
Aspect CEX (Centralized Exchange) DEX (Decentralized Exchange)
Management Managed by a centralized company or entity (e.g., Binance, Coinbase) No centralized entity; based on smart contracts on the blockchain (e.g., Uniswap, PancakeSwap)
Asset control The exchange holds control over the private key; users deposit assets on the platform Users hold their own private keys; transactions are made directly from the wallet
KYC/AML KYC (identity verification) is usually mandatory Usually no KYC; more anonymous
Liquidity Generally high liquidity; centralized order book Depends on liquidity pools; can be fluctuating
Trading features Complete features: spot, margin, futures, staking, etc. Generally only token swaps, some DEXs are starting to have additional features
Transaction fees Can be lower for large trades; there is a platform fee Blockchain gas fees + DEX fees; can be more expensive during network congestion
Security Vulnerable to hacks because funds are centralized Safer in a non-custodial manner, but risks of bugs in smart contracts
Transaction speed Very fast, due to centralized systems Depends on the speed of the blockchain used
Suitable for Users who want convenience, comfort, and many features Users who want full control over assets & more decentralization
In summary:
CEX = practical & complete features, but you trust your assets to a third party.
DEX = you hold full control, but user experience and liquidity can sometimes be more limited.
