#CEXvsDEX101
CEX – Centralized Exchange
Definition:
A Centralized Exchange (CEX) is a platform that facilitates cryptocurrency trading via a central authority or company.
Examples: Binance, Coinbase, Kraken, KuCoin.
Key Features:
Custodial: The exchange holds users' funds.
High liquidity and fast transactions.
User-friendly with customer support.
KYC/AML compliance (Know Your Customer / Anti-Money Laundering).
Security risks: Prone to hacks since funds are stored in centralized wallets.
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🌐 DEX – Decentralized Exchange
Definition:
A Decentralized Exchange (DEX) allows users to trade cryptocurrencies directly with one another, without an intermediary.
Examples: Uniswap, PancakeSwap, SushiSwap, dYdX.
Key Features:
Non-custodial: Users retain control of their private keys and funds.
No KYC in most cases (more privacy).
Smart contract-based trading.
Lower liquidity compared to CEXs.
More secure in terms of custody (you own your funds), but you must manage your own wallet security.
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🆚 CEX vs DEX: Comparison Table
Feature CEX DEX
Control of Funds Exchange (custodial) User (non-custodial)
Regulation Regulated (usually) Often unregulated
KYC Required Yes No (usually)
Ease of Use High Moderate
Speed Fast Depends on blockchain speed
Fees Exchange sets fees Network and protocol fees
Security Prone to hacks (if poorly managed) Safer custody; smart contract risks
Liquidity Higher Lower
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✅ Summary
CEX = Centralized, easy to use, but funds are in the hands of the company.
DEX = Decentralized, you control your funds, but it's more technical and requires self-responsibility.
