#CEXvsDEX101 In cryptocurrencies, "DEX" refers to a "Decentralized Exchange," while "CEX" is a "Centralized Exchange." The main difference lies in how transactions are conducted. DEXs allow direct trading between users without a central authority, while CEXs operate as intermediaries, matching buy and sell orders.

DEX (Decentralized Exchange):

Decentralization:

There is no central entity controlling transactions. Orders are processed through smart contracts on blockchains.

User control:

Users maintain control over their private keys and thus over their cryptocurrencies.

Security:

Security depends on the protocol and the blockchain used, but generally offers more protection against hacks and fraud.

Privacy:

Trading is more private, as disclosing personal information to a central authority is not required.

Costs:

Transaction costs can be lower because there are no intermediaries.

CEX (Centralized Exchange):

Centralization: A company controls the platform and the transactions.

Easier onboarding: Usually, the registration and onboarding process is simpler.

High liquidity: CEXs offer higher liquidity, facilitating the trading of large volumes of cryptocurrencies.

Customer support: CEXs typically provide more robust customer support.

Custody: Users must deposit their cryptocurrencies on the platform to trade, which may pose custody risks.

KYC/AML requirements: CEXs usually require identity validation and information to comply with regulations.

DEX vs. CEX - Comparison:

Feature

DEX

CEX

Centralization

Decentralized

Centralized

Control

User retains control over private keys

The platform controls the private keys

Security

Depends on the protocol and blockchain

May be subject to hacks and fraud

Privacy

Greater privacy

Lower privacy, as it involves information disclosure

Costs

Generally lower

Can be