#CEXvsDEX101

Centralized and decentralized exchanges differ fundamentally in structure, operation, and philosophy. Below, I outline their key differences, pros and cons, and scenarios for preferring one over the other.

Structure and Control:

CEXs: Operated by a central entity or company (e.g., Binance). They act as intermediaries, managing user funds, order books, and trade execution.

DEXs : Run on blockchain protocols without a central authority (e.g., Uniswap, PancakeSwap). Trades occur peer-to-peer via smart contracts, and users retain control of their funds.

Custody of Funds:

CEXs: Users deposit funds into the exchange’s wallets, relinquishing control. The exchange holds private keys.

DEXs: Non-custodial. Users manage their own private keys and trade directly from their wallets (e.g., MetaMask).