Centralized and Decentralized Crypto Exchanges: Custody, Trading, and Risks
Summary
The guide compares centralized exchanges (CEXs), which hold customer assets and match orders through a platform, with decentralized exchanges (DEXs), where users connect wallets and trade through blockchain-based systems. It reviews differences in custody, identity checks, fees, fiat access, support, regulation, and security. It also outlines common DEX designs: automated market makers that price trades through liquidity pools, order-book venues, and aggregators that access multiple sources.
The central decision is a tradeoff between convenience and platform support on one side, and self-custody and direct control on the other. CEX users must trust the exchange’s custody and safeguards; DEX users bear responsibility for private keys and can face smart-contract flaws, scams, fragmented liquidity, and slippage. The guide is a general introduction, not a measured comparison: several claims about platform protections and relative fees are broad and may vary by venue, network, and time. Its repeated promotion of one exchange should be distinguished from its explanatory content.
Key ideas
- CEXs custody user assets and typically provide account services, while DEXs enable wallet-based trading through blockchain systems.
- CEXs can offer fiat access and support, while DEXs give users more direct control of their keys and funds.
- AMMs use liquidity pools and algorithms, while some DEXs use order books or aggregate multiple trading sources.
- CEX custody creates reliance on platform security, whereas DEX self-custody makes users responsible for keys and contract risks.
- Fees, liquidity, regulation, and security vary across venues, so the guide’s general comparisons are not universal.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.