CEX VS DEX: WHERE TO TRADE
Plain English
Centralized exchanges (Coinbase, Kraken, Binance) work like a stockbroker — they hold your crypto for you. Decentralized exchanges (Uniswap, dYdX) let you trade directly from your wallet, with no middleman. Each has trade-offs.
Going deeper
CEXs offer the deepest liquidity, fiat on/off ramps, and a familiar UX, but you give up custody and face counterparty risk (FTX collapsed with billions of customer funds). DEXs use automated market makers (AMMs) like Uniswap or order books like dYdX, with users keeping custody throughout. DEX trades cost gas; quoted prices include slippage based on pool depth. Most serious crypto traders use both: CEXs for fiat conversion and majors, DEXs for newer tokens and on-chain composability with DeFi protocols.
Examples
Self-custody after FTX
FTX customers lost access to billions in 2022 when the exchange collapsed. Users who self-custodied their crypto in personal wallets lost nothing. The lesson: 'not your keys, not your coins.'
DEX for new tokens
A new token launches on Uniswap before any CEX lists it. To buy early, you connect MetaMask, swap ETH for the token, and pay gas. Three weeks later it lists on Coinbase — early DEX buyers are 5x ahead.