Hello friends. Today I will try to explain to you two concepts that you constantly hear in the crypto world: CEX and DEX.
CEX is the abbreviation of the English term "Centralized Exchanges" and means "central exchange" in Turkish. DEX is the abbreviation of "Decentralized Exchanges" and means "decentralized exchange" in Turkish.
As can be understood from the Turkish translations, CEX are centralized exchanges. You can carry out your buy-sell transactions by depositing your crypto or fiat currencies in a central exchange. For example, Binance is a centralized exchange.
DEX, on the other hand, allows you to trade on decentralized exchanges. Your transactions are carried out using the cryptocurrencies you keep in your own wallets, and these transactions are made through decentralized exchanges. For example, you can perform your crypto exchange transactions by connecting your Metamask wallet to the PancakeSwap platform.
So, what are the advantages and disadvantages of CEX and DEX?
The advantage of CEX exchanges is that regular users can deposit funds to the blockchain using fiat money. Additionally, you can easily purchase coins or tokens from different ecosystems. But of course, you will have to pay the fee set by the exchange.
The biggest advantage of DEX is that the assets you own belong entirely to you. We all know the crisis we have experienced in the crypto world before. Since each token or coin will be in different networks in exchange transactions, you will need to store your assets in this network. Since most tokens or coins are on different networks or their own networks, trading can be a little more challenging than on CEXs.
While performing your transactions on CEX exchanges, you can easily follow your transaction history and details on the exchange. These exchanges generally make it easy for beginners to enter the cryptocurrency world with their user-friendly interfaces and various helpful tools. You can also contact customer service and get help if you encounter a problem.
However, one of the biggest drawbacks of CEX exchanges is security concerns. When keeping your cryptocurrency on a centralized exchange, you have to trust the security measures of that exchange. In the cryptocurrency world, many cyber attacks have occurred, especially targeting centralized exchanges, and as a result of these attacks, users have lost large amounts of assets.
On the other hand, since DEXs are completely decentralized, you retain control of your own assets. This increases the security of your assets even in the event of a potential cyber attack. However, DEXs can often have more complex interfaces and therefore be harder for new users to understand and use. Additionally, contacting customer service may not often be an option when you encounter a problem.
DEXs also have a feature called “liquidity pools”. Users can add their own tokens to these pools to provide liquidity for a particular token pair and receive a share of the transaction fees in return. This can be used as a way to generate passive income.
Ultimately, determining which type of exchange is better for you depends on your personal preferences and risk tolerance. You should always do your own research and make informed decisions when trading in the crypto world.
