#CEXvsDEX101
### **CEX vs. DEX 101: Key Differences Explained**
When it comes to trading cryptocurrencies, you have two main options: **Centralized Exchanges (CEXs)** and **Decentralized Exchanges (DEXs)**. Here’s a breakdown of their key differences:
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### **1. Control & Custody**
- **CEX (e.g., Binance, Coinbase):**
- Controlled by a company.
- Users deposit funds into exchange wallets (not self-custody).
- Requires KYC/AML verification.
- **DEX (e.g., Uniswap, PancakeSwap):**
- No central authority; runs on smart contracts (e.g., Ethereum, Solana).
- Users retain full control of their funds (via wallets like MetaMask).
- No KYC (usually).
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### **2. Liquidity & Trading Pairs**
- **CEX:**
- Higher liquidity (market makers & large order books).
- Supports fiat-to-crypto (USD, EUR → BTC).
- More trading pairs (including derivatives).
- **DEX:**
- Liquidity depends on user-provided pools (LPs).
- Mostly crypto-to-crypto swaps (e.g., ETH → USDC).
- Newer tokens often appear first on DEXs.
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### **3. Security & Risks**
- **CEX Risks:**
- Hacking risks (exchange holds your keys).
- Government regulations can freeze accounts.
- **DEX Risks:**
- Smart contract exploits (if code has bugs).
- Impermanent loss (for liquidity providers).
- No customer support (transactions are irreversible).
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### **4. Fees & Speed**
- **CEX:**
- Lower gas fees (trades happen off-chain).
- Faster execution (centralized matching engines).
- **DEX:**
- Gas fees apply (paid in blockchain-native tokens like ETH).
- Slower during network congestion.
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### **5. Use Cases**
✅ **Use a CEX if:**
- You’re a beginner.
- You want fiat on/off ramps.
- You need high liquidity for large trades.
✅ **Use a DEX if:**
- You prioritize privacy & self-custody.
- You want early access to new tokens.
- You’re comfortable with DeFi (wallets, gas fees, etc.). $
