The difference between centralised and decentralised exchanges

The cryptocurrency exchange is where supply and demand meet. A seller wants to find a buyer for his coins. If supply meets demand, trade occurs. Participants exchange coins or tokens with each other at a pre-agreed exchange rate. Most people understand the principles on which exchanges operate. But how is a centralised exchange (CEX) different from a decentralised one (DEX)? What are the benefits of decentralised exchanges for users? Cardano will allow third-party teams to build DEX, and there are already several of them operating in the ecosystem. Users should know how DEX should work to be better than CEX.


  • CEX can misuse user deposits.
  • The ability to misuse user deposits for other financial activities is a major cause of CEXs bankruptcy.
  • When using DEX, no central authority should act as a custodian of your funds.
  • DEX is only an automated service and whoever pays a fee can use it.
  • CEXs go bankrupt and DEXs keep running.

This article was prepared by Cardanians with support from Cexplorer.

Read the article: The difference between centralised and decentralised exchanges | Cardano Explorer

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Thanks for the crisp and precise article, would go a long way in educating the masses. I have been seeing a lot of the articles by Cardanians even on reddit I believe ? They’re nice, please keep them rolling.

How do I use a DEX to buy ADA for EUR?

You are, at least partly, comparing apples to oranges.

As long as the real world is using real money, we need on- and off-ramps and at the moment these are mostly the CEXes. That function cannot be replaced by DEXes.

But, yes, it’s a good idea to get the funds off the CEX as fast as possible.

yes , true. I was about to add this point. Not to forget, DEXes can only swap tokens which are on the same chain and therefore, quite limited in their use.

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Axo is planning to provide fiat on- and off-ramps. As I understand, an entity can have a banking licence and allow users to set up KYC’ed accounts. Users can transfer fiat and get stable coins directly in their Cardano wallet. All future trading can then be decentralised.

The on- and off-ramps can’t be decentralised because your current money is not decentralised.

in the future you can possibly ask your employer to pay you stable coins to your wallet. Your employer will still need to report your wages to govt so there will be no ability to avoid taxes.