#CEXvsDEX101

CEX vs. DEX 101:

In the world of cryptocurrency, exchanges are platforms where users can buy, sell, and trade digital assets. They generally fall into two main categories: Centralized Exchanges (CEXs) and Decentralized Exchanges (DEXs). Understanding their core differences is crucial for anyone engaging with crypto.

Centralized Exchanges (CEX)

CEXs are the most common type of cryptocurrency exchange and operate much like traditional financial institutions. They are managed by a central company that acts as an intermediary for all transactions.

* How they work: When you deposit funds into a CEX, the exchange takes custody of your assets. They manage your private keys and facilitate trades on your behalf using an order book model.

* Exchanges (DEX)

DEXs operate directly on blockchain networks through smart contracts, without the need for a central intermediary. Users trade directly with each other, maintaining control over their funds.

* How they work: Users connect their personal crypto wallets directly to the DEX and trade peer-to-peer using automated market makers (AMMs) or on-chain order books. Funds never leave the user's wallet until the exact moment of trade execution.