### Centralized vs. Decentralized Exchanges: Your Quick Guide to #CEXvsDEX101

Differences at a Glance

| Aspect | Centralized Exchange (CEX | Decentralized Exchange (DEX) |

|--------------------------|--------------------------------------|----------------------------------------|

| Custody | Funds held by a 3rd party (the exchange). | Users retain full custody (self-custody via wallets). |

| Control | Managed by a company (e.g., Binance, Coinbase). | Algorithmic; runs on smart contracts (e.g., Uniswap, PancakeSwap). |

| Transparency | Limited; internal order books. | Fully transparent; on-chain transactions. |

| Speed | Faster (off-chain matching). | Slower (on-chain settlement). |

| KYC/Privacy | Mandatory KYC. | Anonymous; no KYC. |

| Fiat Integration | Supports fiat deposits/withdrawals. | Crypto-only (rare fiat support). |

✅ Pros & Cons

| CEX | DEX |

| ✅ Pros | ✅ Pros|

| • High liquidity (deep order books). • **User-friendly** (simple UI, customer support). • **Advanced tools** (futures, staking, fiat ramps). | • **Self-custody** (no counterparty risk). • **Permissionless** (global access). • **Censorship-resistant** (no central authority). |

| ❌ Cons | ❌ Cons |

| • Hack targets (custodial risk, e.g., Mt. Gox). • **KYC requirements** (privacy trade-off). • **Regulatory exposure** (restrictions per jurisdiction). | • **Lower liquidity** for niche tokens. • **Complex UX** (gas fees, wallet setup). • **Irreversible errors** (no customer support). |

🎯 When to Use Each

- Prefer CEX if you:

- Are a **beginner** (easy onboarding).

- Trade **high volume** or need **fiat conversions**.

- Use **advanced derivatives** or earn interest via **staking**.

- Value **speed** for arbitrage or day trading.