The choice between centralized exchanges (CEX) and decentralized exchanges (DEX) depends on your priorities: convenience vs control, features vs self-custody, and trading needs vs security preferences.
Centralized Exchanges (CEX)
CEXs like Coinbase, Binance, and Kraken operate like traditional brokerages. They hold your funds, manage order books, and provide user-friendly interfaces. Pros include fiat on-ramps, advanced trading features, and customer support. Cons include custodial risk and KYC requirements.
Decentralized Exchanges (DEX)
DEXs like Uniswap, Curve, and PancakeSwap run on smart contracts. You trade directly from your wallet—no deposits required. Pros include self-custody, privacy, and access to more tokens. Cons include higher complexity and gas fees.
When to Use Each
Use CEXs for: fiat conversions, large trades requiring deep liquidity, margin trading, and when you’re starting out. Use DEXs for: trading newer tokens, maintaining custody of your assets, accessing DeFi protocols, and privacy.
Many experienced traders use both: CEXs for major trades and fiat access, DEXs for DeFi participation and token diversity.