Difference Between DEX and CEX Before Investing in Crypto
The cryptocurrency world is closely related to Centralized Exchanges and Decentralized Exchanges. An exchange has an important role in crypto transactions, which is a place for crypto exchanges. Every transaction in cryptocurrency definitely requires a market. Activities in the market often occur in DEX and CEX. But there is often a mistake in understanding the difference between the two.
DEX (Decentralized Exchange)
DEX (Decentralized Exchange) is a peer-to-peer (P2P) platform that connects buyers and sellers to exchange and trade crypto assets. DEX uses smart contracts and utilizes blockchain technology with a decentralized concept.
Every transaction on the DEX will be recorded on the blockchain without a centralized/supervising authority. DEX has a decentralized nature that allows everyone to carry out trading activities of buying and selling crypto assets using smart contracts.
Characteristics of a DEX (Decentralized Exchange):
- User/users do not need to include their identity (KYC) on every transaction
- Transactions do not use each individual’s order book but the liquidity pool
- Security is largely the responsibility of each individual
Example of a DEX (Decentralized Exchange):
- Pancakeswap
- Sushiswap
- Uniswap
- Osmosis
- Katana dex
CEX (Centralized Exchange)
CEX (Centralized Exchange) is a platform for trading and exchanging crypto assets regulated by a centralized company. CEX provides facilities as a third party in bringing together buyers and sellers of crypto assets to store and carry out buying and selling activities of crypto assets. Within CEX, trading volume of crypto assets is higher when compared to DEX.
Characteristics of a CEX (Centralized Exchange):
- Users need to state their identity (KYC) for each transaction
- Transactions use the order book to reconcile supply and demand between sellers and buyers
- Security is largely the responsibility of the exchange
- CEX transaction volume is generally bigger than DEX
Example of a DEX (Decentralized Exchange)
- Binance
- Coinbase exchange
- Kucoins
- OKX
- Kraken
If you want to see the best Centralized Exchange that you can use, maybe you can visit the websites https://coinmarketcap.com/rankings/exchanges/ and https://www.coingecko.com/en/exchanges to be a reference in making transactions.
