When comparing a centralized exchange (CEX) vs a decentralized exchange (DEX), we looked into how the exchanges differ, trading fees, trading volumes, and other factors.
CEXs act as intermediaries, offering a familiar, user-friendly experience. They handle transactions, provide liquidity, and often require identity verification.
DEXs, on the other hand, run on blockchain technology without a central authority. They use smart contracts to facilitate peer-to-peer trading, giving users full control of their assets. Examples include Uniswap, PancakeSwap, and Raydium.
Each exchange type has its strengths and trade-offs. CEXs offer speed and ease of use, while DEXs prioritize self-custody and decentralization. So, which is better? That depends on what you need.
- Show Full Guide
What is a centralized exchange in crypto?
A centralized exchange is a digital platform where users buy, sell, and trade cryptocurrencies through an intermediary. CEXs are managed by companies that control transactions, match orders, and secure user funds.
These platforms function similarly to stock exchanges, providing features like market orders, limit orders, trading pairs, and liquidity pools.
One key advantage of CEXs is their ease of use. They offer a familiar interface, customer support, and fiat on-ramps, allowing users to trade with traditional currencies. Many CEXs also offer advanced trading options like margin trading and futures.
However, CEXs require users to trust a third party with their funds and personal data. While they provide security measures, they remain prime targets for hacks.
How do centralized exchanges work?
Before trading, users create an account and complete Know Your Customer (KYC) verification.
Once verified, they enable security features like two-factor authentication (2FA) and fund their accounts via fiat deposits (bank transfers, credit cards) or crypto transfers. CEXs store funds in multis-signature wallets (for quick access) and cold wallets (for security).
CEXs use order books to match buy and sell orders instantly. Market orders execute immediately, limit orders wait for a set price, and stop-loss orders minimize losses automatically.
Liquidity comes from market makers, who place large orders to stabilize prices and tighten the bid-ask spread. Some exchanges use in-house market makers, while others rely on third-party participants.
CEXs generate revenue through trading fees, maker-taker models, deposit and withdrawal fees, margin trading interest, and token listing fees.
What is a decentralized exchange (DEX) in crypto?
A decentralized exchange is where users trade cryptocurrencies directly without intermediaries.
Unlike centralized exchanges (CEXs), which control funds and order books, DEXs operate through blockchain-based smart contracts that enable trustless and permissionless trading.
The hundreds of DEXs in existence today play a key role in decentralized finance (DeFi), allowing users to swap tokens, provide liquidity, and earn rewards while retaining full control of their private keys.
Since no single entity oversees transactions, DEXs reduce counterparty risk but require users to manage their own security.
Popular DEXs include Uniswap (Ethereum), PancakeSwap (BNB Chain), SushiSwap, Curve, and dYdX.
These platforms offer an alternative to CEXs by eliminating the need for third-party custody, reducing censorship risks, and enhancing financial sovereignty.
How do decentralized exchanges work?
DEXs are non-custodial, meaning users trade directly from wallets like MetaMask, Trust Wallet, or Ledger without relying on an exchange to hold funds. Trades happen on-chain, reducing counterparty risk. Users retain private keys, ensuring full control over assets.
Most DEXs use Automated Market Makers (AMMs) instead of order books. Liquidity providers (LPs) deposit token pairs (e.g., ETH/USDT) into liquidity pools. Traders swap assets using these pools, with prices set by smart contracts (e.g., Uniswap’s x * y = k formula).
As supply shifts, the smart contract adjusts prices automatically. LPs earn trading fees (e.g., 0.3% on Uniswap) and may receive governance tokens like UNI or CAKE.
Some DEXs use on-chain order books (e.g., dYdX, Serum), allowing buyers and sellers to place bids. To trade, users connect their wallet, select a pair, approve spending, and confirm the transaction.
Gas fees vary by network—Ethereum DEXs have high fees, while Layer 2 solutions and BNB Chain offer cheaper alternatives.
CEX and DEX trading fees compared
CEX trading fees
| Centralized exchange | Binance | OKX | MEXC |
| Spot trading fees (maker/taker) | 0.10% (reduce with BNB holdings) | 0.08% – 0.10% for regular users | 0.10% |
| Futures trading fees (maker/taker) | 0.02% – 0.04% for regular users | 0.02% – 0.05% | 0.02% – 0.06% |
| Buy crypto with fiat currencies | 3.5% | 3.5% | 3.5% |
DEX trading fees
| Deentralized exchange | Uniswap | PancakeSwap | Raydium |
| Swapping cryptos | From 0.05% – 1% | 0.25% | 0.25% |
| Futures trading fees (maker/taker) | N/A | 0.02% – 0.07% | 0.1% |
| Buy crypto with fiat currencies | 3.25% | 3.50% – 4.50% | N/A |
While the fees may appear similar, there are now withdrawal/deposit fees. Other decentralizing trading platforms focusing on spot trading and perpetual have fees similar to CEXs.
If everything is considered, it is cheaper to trade on DEXs than CEXs.
CEX and DEX trading volumes compared
Trading volume measures how actively assets are bought and sold on an exchange. Higher volume means better liquidity, lower slippage, and smoother trade execution.
Trading volumes on CEXs
Binance: The largest crypto exchange, processing over $50 billion daily. Its deep liquidity spans spot, futures, and margin markets.
OKX: A top derivatives platform with daily volumes exceeding $10 billion. Most activity comes from futures and options trading.
MEXC: The exchange specializes in altcoins, trading between $2 billion and $5 billion daily. It has lower liquidity than Binance or OKX but is strong in niche markets.
Trading volumes on DEXs
Uniswap: The largest DEX, handling $1–$2 billion daily. Operates on Ethereum and Layer 2 networks but has higher slippage than CEXs.
PancakeSwap: BNB Chain’s leading DEX, trading $500M–$1B daily. Lower fees but less liquidity than Uniswap.
Raydium: The top Solana DEX, processing $100M–$500M daily. Faster and cheaper than Ethereum-based DEXs but has lower trading activity.
CEX vs DEX: Which exchange lists more cryptocurrencies?
The number of cryptocurrencies available on an exchange impacts trading opportunities. While centralized exchanges (CEXs) and decentralized exchanges (DEXs) offer diverse assets, their listing processes differ significantly.
Cryptocurrency listings on CEXs
As Dex Screener shows, CEXs manually vet tokens before listing and evaluating regulatory compliance, liquidity, demand, security, and team credibility.
MEXC and KuCoin list over 1,000 tokens, while regulated CEXs like Coinbase list fewer than 500 due to stricter compliance.
Exchanges may delist tokens if they lose liquidity, face regulatory scrutiny, or encounter security issues.
DEXs allow permissionless listings, meaning anyone can add a token if it follows blockchain standards (e.g., ERC-20 on Ethereum, BEP-20 on BNB Chain).
This results in thousands of available tokens – Uniswap lists many ERC-20 assets, while PancakeSwap supports 4,000+ BNB Chain tokens. Cross-chain DEXs like SushiSwap and ThorChain further expand access.
While DEXs offer more variety, they also increase risks, such as scams, rug pulls, and low-liquidity tokens, making due diligence essential for traders.
CEX and DEX: Which is more secure for buying and selling cryptocurrencies?
Centralized exchanges (CEXs) provide regulatory oversight and audits, while decentralized exchanges (DEXs) offer self-custody and eliminate third-party risks.
Security on Centralized Exchanges (CEXs)
CEXs follow a custodial model, holding users’ funds in centralized wallets. This allows for smooth trading but creates risks if the exchange is hacked or collapses (e.g., FTX, Mt. Gox). However, top CEXs like Binance and Coinbase invest in:
Cold storage: Most assets are stored offline to prevent theft.
Regulations: Many countries provide crypto licenses. When an exchange is licensed, it must follow strict security rules.
Insurance funds: Some exchanges, like Binance’s SAFU fund, cover losses.
Token audits: CEXs review new listings for smart contract security, legitimacy, and liquidity risks, reducing exposure to scam tokens.
Security on Decentralized Exchanges (DEXs)
DEXs operate on a non-custodial model, meaning users control their funds without relying on third parties. This reduces risks like exchange failures and asset freezes.
Decentralization: No single point of failure, making DEXs resistant to hacks that target centralized systems.
Smart contract audits: Major DEXs like Uniswap and Curve undergo frequent third-party audits to minimize vulnerabilities.
Permissionless trading: Users can trade freely without restrictions or censorship.
Wallet-based security: No exchange account means no risk of centralized breaches—users manage security via private keys and hardware wallets.
Conclusion
Both CEXs and DEXs have pros and cons. Crypto traders may prefer DEXs as there is no need to register or provide personal information (this could change in the future).
CEXs often have greater volumes and better customer support than DEXs. Liquidity is often higher in the top-tier exchanges; however, in the most popular cryptos, such as BTC and ETH, some DEXs have sufficient liquidity for large transactions.
While staking APY was not discussed, DEXs offer a greater yield than CEXs.
