This post describes the key differences between the decentralized and centralized exchanges (DEXs and CEXs) briefly and in little detail.

A few examples of CEXs are Binance, FTX, Coinbase, and Kraken. A few examples of DEXs are Uniswap, dYdX, and PancakeSwap. For the full lists, see DEXs, CEXs.

DEXs versus CEXs:

• Faster to operate as there is no need to register and no need to replenish the deposit beforehand.

• As a rule, total fees are lower, since you don’t need to replenish the deposit and then withdraw funds from it to put them in the wallet.

• Since there is no intermediary organization, there is no one controlling you.

• Since there are no KYC/AML procedures to identify the user, there is no way to check the legality of the funds’ origin.

• As a rule, there is no regulation by the state.

• The non-custodial principle means that you don’t have to keep your funds in the exchange wallet. Your assets stay in your wallet until the transaction occurs.

Does it look like DEXs have only advantages? This isn’t quite so. The lack of KYC/ALM regulations means that the fiat currencies (USD, EUR, etc.) cannot be traded on such exchanges. It also means that only crypto-to-crypto exchanges are possible. In addition, these peculiarities of DEXs often lead to the inability of institutional investors (companies, foundations, etc.) to work on such exchanges.

We won’t go into detail about what makes CEXs different in these respects; their characteristics are simply opposite to those of DEXs.