May 20, 2025 Welcome back to our blog, where we discuss all the important topics that can help our users become more educated and profitable crypto traders.
Earlier this month, we launched our new integration with a decentralized exchange, adding Hyperliquid to our portfolio of supported exchanges. To commemorate our entrance into the DeFi world, today, we’ll be discussing a dilemma every crypto trader faces at some point.
Which is better: centralized exchanges (CEXs) or decentralized exchanges (DEXs)?
In our CEX vs. DEX comparison, we’ll discuss their differences and whether one is better today.
Before we move forward, please remember that all the information in this blog post is solely for educational purposes and should not be considered financial advice or a call to action. The world of crypto trading is dynamic, complex, and constantly changing; past performances do not guarantee future results. Do your research and trade at your own risk.
Centralized exchanges are essentially the same as traditional exchanges, only one is used for trading stocks and the other is for trading crypto tokens.
In other words, a CEX is a marketplace for buyers and sellers to meet and is managed by for-profit organizations. To maintain the trading platform and facilitate transactions, CEXs usually charge a small fee for each trade in return for their services.
This centralized structure enables CEXs to execute transactions quickly. As part of this setup, traders must share their private keys with the CEX, which acts as a custodian of the trading account.
The good news is that CEXs are usually required to withstand strict regulations, which should assure traders that their funds are appropriately managed. As part of these regulatory constraints, traders on CEX platforms must go through extensive know-your-customer (KYC) protocols to ensure the CEX and its users are not promoting scams, money laundering schemes, or other suspicious activities.
Decentralized exchanges work similarly to centralized ones, but no single authority manages them. Instead, these trading platforms utilize smart contracts and liquidity pools to enable peer-to-peer trading without third-party intermediaries.
The architecture of most DEX platforms is based on open-source code deployed on an already up-and-running blockchain network (like Ethereum, for example), where trades are settled.
Thanks to this distributed structure, DEXs commonly face less regulatory scrutiny, as they are more challenging for governments and other regulatory entities. That also enables them to offer traders a trustless and permissionless crypto trading experience that doesn’t require handing out sensitive personal data or giving away any access to funds.
Now that we have some basic understanding about the main attributes of both types of crypto exchanges, let’s see how they hold up when reviewing them across the main criteria crypto traders should care about:
Both CEXs and DEXs are considered very safe choices for trading. That said, although CEXs invest massive resources in security measures, it’s genuinely hard to compete with decentralization’s advantages regarding data protection. With no potential single point of failure, DEXs, as truly decentralized platforms, are often viewed as a slightly safer option.
In addition, DEXs offer trustless and permissionless P2P trading with no intermediaries, custodians, or other third-party involvement. Not bound by strict regulations like CEXs, DEXs allow traders to trade anonymously without custodians or KYC requirements.
CEXs, being well-managed for-profit companies, have an advantage regarding the platform’s trading experience and simplicity of use.
With a dedicated team of top developers, CEXs continue improving their final product, hoping to attract new users by offering a user-friendly interface for crypto traders. This being a heavily funded competition among CEXs, crypto traders enjoy a smooth trading experience that even novice traders can easily navigate.
This is hardly the case for DEXs. With a more scattered and diverse team in charge, making decisions about new updates and bringing them to life proves much more challenging. This, combined with more limited resources, is why DEXs are often considered systems that are harder to navigate, especially for newcomers to the crypto world.
This is another field where CEXs usually have the upper hand over DEXs. On CEXs, you have a team on payroll to assist traders in their time of need, usually 24/7, ensuring fast response time regardless of which time zone you are located in.
On the other hand, in DEXs, user assistance is mainly done by volunteers, which usually entails longer waiting times. While DEXs are supported by a strong community that can properly deliver professional advice, CEXs are considered the winner in this category by most crypto traders who have experienced both.
While trading volumes across DEXs make up about 17% of the trading volumes occurring in CEXs, usually, CEXs tend to offer a more vibrant trading environment. With more active users and the ability to boost liquidity in times of need, CEXs are generally better at handling and executing large trading orders.
That said, DEXs’ popularity is on the rise. Along with the ongoing development of larger liquidity pools and more efficient liquidity protocols, DEXs are constantly closing the gap from CEXs as a platform that allows high-paced trading with low slippage.
DEXs, as tools for promoting true financial freedom, don’t have extensive limitations on enlisting new tokens. Not bound by any laws or regulations, as long as the demand is there and the token technologically complies with the exchange’s operating system, enlisting new tokens on DEXs is pretty straightforward. This makes DEXs the place for anyone interested in trading freshly launched tokens or those who want to participate in trading meme coins and other minor crypto projects.
On the other hand, CEXs operate under government supervision, are forced to navigate a constantly changing regulatory landscape, and must align with it. This makes enlisting new tokens much more rigorous and, as a result, leads to fewer trading options and a smaller total number of crypto tokens available.
Conversely, being regulated enables CEXs to win the confidence of financial institutions and stablecoin issuers’ confidence. This is one of their main strengths, as they bridge the crypto ecosystem and fiat-based economies.
For now, stablecoins and other solutions for facilitating the transition between the fiat and crypto worlds can mostly be found on CEXs and less on the more crypto-centric DEXs.
This is one area where the different architectures of CEXs and DEXs play a role.
CEXs are usually in complete control of their operating network, which allows them to present traders with a clear picture of their trades. When trading on CEXs, crypto traders know the speed at which trades are being executed and how much they’ll pay in commission for each trade.
That is not necessarily the case in DEXs, where most leading DEXs, like Ethereum’s Uniswap and Solana’s Jupiter, are typically built on existing layer-1 or layer-2 blockchains. Since DEXs are linked to the blockchain they operate on, their performance is more susceptible to changes.
This means that DEXs that run on fast blockchains with low gas fees can give CEXs a run for their money when it comes to fast executions at low cost and sometimes even have the upper hand. Trading costs and speeds depend on the DEX itself and its underlying blockchain, so they change occasionally, which might be challenging for some traders.
So, which one is better? A regulated centralized exchange run like a business, or a truly free and open marketplace run by its members and not governed by any single authority?
Both types of platforms have their strengths and weaknesses. Crypto traders can easily decide between the two options based on their experience level.
Newcomers to the crypto world are generally better off beginning their crypto trading journey on CEXs. Offering a more intuitive trading experience accompanied by 24/7 customer support, CEXs are an excellent place for novice crypto traders to take their first steps. That’s not to say CEXs don’t have much to offer for experienced traders. Fast executions, high liquidity, low trading fees, and low slippages are strong selling points for traders from all levels.
For experienced traders who know how the crypto world works, DEXs can be great trading platforms. Although they might be more challenging to operate, DEXs constantly improve, and their popularity grows as time passes.
Allowing permissionless P2P trading with no intermediaries, KYC requirements, and almost no restrictions, DEXs are a better option for traders looking for true financial independence and those focused on trading new or small-sized crypto projects.
Whether you’re leaning towards working with centralized exchanges, decentralized exchanges, or both, we’ve got you covered. At Cornix, we specialize in automated trading systems tailor-made for crypto traders’ needs.
Our all-in-one trading solutions include a range of advanced crypto bots alongside our platform’s advanced features. This includes signals bots, DCA bots, grid bots, Tradingview bots, demo trading, backtesting, and much more.
Still have second thoughts? Check out our zero-commitment two-week free trial and explore how we can help you become a more profitable crypto trader.
