🤓 What is a DEX? Differences between DEXs and CEXs

Today, we will delve into one of the key topics in Web3 and determine which trading platforms are better to use.

DEX (decentralized exchange) – platforms for cryptocurrency exchange that operate on blockchains and do not require the involvement of a third party to conduct transactions.

CEXs (centralized exchanges) were discussed in this post

Examples of DEXs:

– STON.fi, DeDust (on the TON blockchain)
– Uniswap, SushiSwap (on Ethereum, BSC, and others)

Differences between DEXs and CEXs:

1. Centralization vs. decentralization
– CEX: Controlled by a single organization that oversees all operations and holds users’ funds.
– DEX: Operates based on smart contracts that automatically execute operations without intermediaries.

2. Privacy and anonymity
– CEX: Require Know Your Customer (KYC) procedures (identity verification).
– DEX: Typically, does not require KYC, allowing for anonymity.

3. Asset control
– CEX: Users entrust their funds to the exchange, which is risky. There have been cases of hacks and bankruptcies—e.g., the former major exchange FTX.
– DEX: Users hold funds in their own wallets, trade directly, and maintain full control.

4. Fees and speed
– CEX: Lower fees and high transaction speeds due to centralized infrastructure.
– DEX: Fees are usually higher (depending on the blockchain); transaction speed depends on network capacity.

5. Tokens
– CEX: Strict listing procedures limit the tokens available for trading.
– DEX: Ability to trade any tokens available on the blockchain.

Conclusions

DEXs provide more freedom and asset control, reducing the risks associated with centralized structures; however, they have their drawbacks: high fees and sometimes slower transaction speeds.

It all depends on your needs and preferences. We recommend combining DEX and CEX platforms.

#intern | Not Guide