Crypto Exchange (CEX vs DEX)

A centralised exchange works much like a traditional broker. You deposit funds, the exchange holds them, and it matches your orders against other users on its own order book. This delivers deep liquidity and a familiar interface, but you are trusting the operator with custody of your assets.

A decentralised exchange executes trades through smart contracts on a blockchain. Funds never leave your wallet until the trade settles, so there is no operator holding your balance. Many use automated market makers — pools of assets priced by formula — instead of matching individual buyers and sellers.

The trade-offs are real on both sides. Centralised venues expose you to the operator’s solvency and security; several have collapsed, taking customer funds with them. Decentralised venues remove that counterparty but expose you to smart contract bugs, and a lost private key means permanently lost funds with no support desk to call.

Regulatory status varies widely. Centralised exchanges increasingly require licences, identity verification, and segregation of client assets in major jurisdictions. Decentralised protocols sit in a far less settled position, and the protections you would expect from a regulated venue generally do not apply.

TrustFinance publishes verified user reviews and trust scores for crypto exchanges, including their licences and the regulators overseeing them.