CEX vs DEX 101: Everything You Need to Know About Centralized and Decentralized Exchanges
In the world of cryptocurrencies, there are two main types of trading platforms: centralized (CEX) and decentralized (DEX). Each has its own features, advantages, and risks. In this article, we will explore how they differ, who they are suitable for, and how to choose the best option for your goals.
🔹 What is CEX (Centralized Exchange)?
Centralized exchanges are platforms where trading occurs through an intermediary, meaning a company that manages the entire process. Examples: Binance, Coinbase, Kraken, Bybit.
Features:
• Require registration and identity verification (KYC).
• They store user funds in internal wallets.
• Offer high liquidity, user-friendly interfaces, and customer support.
✅ Pros:
• High transaction speed
• Fiat gateways (buying with $ or €)
• Supports a wide range of assets
• Convenient mobile applications
❌ Cons:
• Risks of hacks and account freezes
• Centralization = dependency on the company
• Not complete privacy
🔸 What is DEX (Decentralized Exchange)?
Decentralized exchanges are platforms that operate on smart contracts without intermediaries. Examples: Uniswap, PancakeSwap, SushiSwap, dYdX.
Features:
• Do not require registration and KYC
• Users maintain control over their keys
• All operations occur directly between wallets
✅ Pros:
• Complete privacy and control over funds
• Minimal fees (in most networks)
• No account freezes
• Ability to participate in DeFi
❌ Cons:
• More complex interface
• Lower liquidity compared to CEX
• No support if something goes wrong
• Vulnerabilities in smart contracts
📊 Comparison Table
Parameter CEX DEX
Management Centralized Decentralized
Verification Required (KYC) Not required
Privacy Limited High
Control of funds On the exchange With the user
Security Depends on the platform Depends on smart contracts
Support There is customer support Absent
Convenience High (UI/UX) Requires experience
Fiat pairs Yes No (usually)
💡 What to choose?
• For beginners and traders: CEX is suitable due to its simplicity and convenience.
• For experienced users and DeFi enthusiasts: DEX opens up more freedom and opportunities.
• Ideal approach: a combination. Use CEX for fiat and deposits/withdrawals, DEX for private and decentralized trading.
