Posts

What is DeFi? (Part 2) - DEXs and CEXs

avatar of @writerjordan
25
@writerjordan
·
·
0 views
·
2 min read

Many people are either camp DEX or camp CEX. but which one is best for you? And which is best overall? Let's talk about that! For starters, DEX stands for decentralized exchange, and CEX stands for Centralized exchange. Centralized simply means it has a central body controlling it, or a central owner. Decentralized means no one owns it or controls it. It basically belongs to the people. Obviously, they both will have disadvantages, as well as advantages. So let's look into each of those.

Advantages of CEX

Maintenance: If a CEX has an issue, that issue is fixed very quickly. Responsibility: Because CEXs are subject to regulation, they have huge responsibilities to uphold. This means making sure they have high levels of security, no loopholes and certainly no fraudulent activity going on. Watchful eye: Because they are subject to tons of regulation, they must scrutinize every transaction done on their platform. This reduces fraud. Disadvantages of CEX.

They have an owner: Because of this, the owners beliefs and nuances may get in the way of the product. They're subject to regulations: This means that a lot of things, such as yield farming and staking are not possible on CEXs. Now let's look at the advantages of DEX

They are decentralized: This means a ton of earning opportunities are possible, such as yield farming, staking, etc They are not subject to regulation: No one can track what you're doing since it's all anonymous, and therefore no one can tax you :) They are usually more efficient: Because no one owns them, they can't be manipulated to fit someone's bidding. Disadvantages of DEX

Because they're owned by no one, no one takes responsibility if things go wrong. So scams can't be held on anyones head. Maintenance: If there's an issue with a DEX, unless they have a super responsive team, the issue usually doesn't get fixed very fast. That's my two cents! I personally prefer DEXs, but which ones do you prefer? Let me know down below!

Posted Using LeoFinance Beta