Centralized vs Decentralized Crypto Exchanges: Key Differences

Cryptocurrency exchanges are online platforms where users can sell, buy, or exchange various cryptocurrencies.

They are divided into two large groups:

1. Centralized exchanges (CEX) – managed by a company that stores user funds, keeps track of transactions, provides customer support, and offers services outside the blockchain.


2. Decentralized exchanges (DEX) – operate on the basis of smart contracts on the blockchain; all transactions are carried out on the blockchain, users store their keys, and there is no single control operator.

By understanding the characteristics of each type of exchange, taking into account factors such as security, control, commission fees, and asset storage conditions, you will be able to make the right choice for yourself.

According to CoinGecko, spot trading volumes remained high in the second quarter of 2025, with DEX volumes rising sharply to nearly $876.3 billion. Thus, decentralized exchanges account for nearly 23% of the total trading market.




In addition, there has been active capital growth in the DeFi segment. Research by defillama shows that the total value locked (TVL) in DeFi will reach $161.6 billion in 2025. This clearly reflects the process of capital renewal and the pursuit of profitability in blockchain.




Experts predict that global cryptocurrency market revenue could reach $54-70 billion in 2025. Binance currently ranks among the leading centralized cryptocurrency exchanges, with a 40% share of the spot market.

Understanding centralized exchanges

Centralized exchanges (CEX) are online platforms where a single legal entity or organization manages the infrastructure, stores user funds, keeps records of all transactions, and acts as an intermediary between buyers and sellers. Examples of such exchanges are Binance, Coinbase, Kraken, Bitstamp and Bybit.

Some interesting statistics about CEX over the past year:

• In the first half of 2025, more than $2.17 billion was stolen due to exchange hacks;


• CEX hot wallet hacks account for almost 62%;


• According to MiCA, only some centralized exchanges have full licensing to provide crypto asset services (CASP).


• By the end of 2024, the total value of crypto assets held by households in Europe had increased to €10 billion.

The choice in favor of centralized crypto exchanges is relevant in the following cases:

• trading large volumes and requiring high liquidity support;


• requiring access to fiat wallets for depositing and withdrawing USD, EUR, and other currencies;


• wanting ease of use with a convenient interface and fast customer support;


• need access to advanced financial products, namely futures, options, leverage, margin trading, etc.;


• search for an intermediary for trust management of own capital.

Benefits of centralized crypto exchanges

Centralized crypto exchanges continue to be a key link in the market for most private investors and traders, as well as companies interested in using digital assets.

Despite the growth of decentralized platforms, they continue to dominate trading activity in 2025, especially in the US and Europe. Their advantages include ease of use, liquidity, cost-effectiveness, and compliance infrastructure. Let's take a closer look at all the advantages.

Simplicity of use and accessibility

• User-friendly interface: Centralized exchanges such as Coinbase, Kraken, and Bitstamp provide intuitive mobile and web applications that simplify the trading process for beginners.


• Customer support: CEXs offer professional support services, online chat, and educational materials.

High liquidity and fast execution

• Liquidity concentration: In the second quarter of 2025, centralized exchanges processed approximately $3.9 trillion in spot volume, while decentralized exchanges reached approximately $876 billion. Thus, CEXs are capable of processing more than four times as many transactions, which provides less slippage for large orders, which is critical for institutional investors and professional traders;


• Execution speed: since orders are matched off-chain, transactions are executed instantly, unlike waiting for blockchain confirmations in decentralized networks.

A wide range of trading pairs and support for fiat currencies

• Centralized exchanges typically trade hundreds of cryptocurrencies alongside direct fiat pairs (USD, EUR, GBP);


• In 2025, Coinbase Coinbase announced support for more than 200 assets paired with the US dollar, while Kraken offers trading in more than 190 cryptocurrencies paired with the euro.

Competitive commissions

• Centralized exchanges offer multi-tiered fees for makers and takers, starting at 0.1% per trade, with additional discounts for high-volume traders or when using the platform's own tokens.


• For example, in 2025, swaps on the Ethereum mainnet sometimes increased the gas cost by $5–15 per trade, which made centralized exchanges significantly cheaper for retail users.

Improved customer protection and regulation

• The US and EU's leading exchanges are regulated as virtual asset service providers (VASPs) or in accordance with MiCA (Europe).


• Regulatory transparency provides more reliable consumer protection, auditing, and more transparent dispute resolution processes.


• In 2025, Coinbase and Bitstamp confirmed their compliance with SEC/FINRA and MiCA standards to increase trust and attract institutional investors.

Disadvantages of centralized crypto exchanges

Although centralized exchanges remain the leaders in the cryptocurrency market in 2025, they have significant drawbacks. For many users, these risks may be key in making decisions, especially when using long-term deposit strategies or scenarios with a high level of confidentiality. Let's take a closer look at all aspects.

Security breaches and custodial risk

• Single point of failure: since centralized exchanges (CEX) store user funds in custodial wallets, they become attractive targets for hackers.


• For example, in February 2025, Bybit crypto exchange was hacked, resulting in losses of $1.46 billion.


• Losses from hacks and fraud on CEXs in the first half of 2025 alone amounted to more than $2.17 billion, which already exceeds the total losses for the whole of 2024.


• According to industry data, 82% hacks of CEX were related to hot wallet interactions.

No control over private keys

• Unlike decentralized exchanges (DEX), where traders store their assets, CEX users must relinquish control of their private keys.


• If an exchange freezes withdrawals (due to hacks, lack of liquidity, or regulatory investigations), users may lose access to their funds.

Dependence on regulators and the burden of compliance

• Centralized exchanges are highly susceptible to regulatory changes: In the US, ongoing actions by the Securities and Exchange Commission (SEC) against major exchanges have caused uncertainty, while in Europe, the MiCA mechanism (effective in 2024–2025) has led to a sixfold increase in licensing and compliance costs for many platforms.


• For users, this means stricter KYC/AML checks, withdrawal restrictions, and, in some cases, the delisting of certain tokens considered to be «securities».


• There is also a risk of sudden service interruptions when regulators investigate or impose sanctions on an exchange, users may temporarily lose access to their assets.

Downtime and technical problems

• Centralized infrastructure may experience downtime during high volatility events.


• Unlike decentralized protocols, which operate as long as the blockchain is active, CEXs rely on their own servers, which means there is a risk of downtime.

Limited supply and hidden costs

• Hundreds of assets are listed on CEX, but they often lag behind DEX in supporting new or highly specialized tokens due to compliance checks.


• Some types of transactions (deposits and withdrawals of fiat funds, purchases with credit cards) are subject to higher fees, which can significantly increase costs.

Decentralized exchanges

Decentralized exchanges (DEX) – these are cryptocurrency platforms built on blockchain. They allow users to trade tokens directly from their wallets through smart contracts, without a centralized operator controlling funds or order books. They embody the core values of DeFi (decentralized finance) through self-custody of assets, transparency, and censorship resistance.

The most popular DEXs include platforms such as Uniswap, PancakeSwap, SushiSwap.

Some interesting statistics about DEX over the past year:

• By mid-2025, there were more than 14.2 million wallets worldwide participating in DeFi activities;


• The weekly volume of DeFi transactions exceeded $48 billion worldwide;


• Uniswap crypto exchange has a 9% market share with a monthly volume of nearly $112 billion.

The choice in favor of decentralized crypto exchanges is relevant in the following cases:

• for confident management of own private keys and wallet security;


• if are not afraid of the technical complexities of DEX, and priorities are control, confidentiality, and access to new tokens;


• trading small or relatively small amounts, where can control slippage and commissions;


• have an active interest in the possibilities of decentralized finance that go beyond spot trading. This includes yield farming, liquidity pools, staking, and cross-chain opportunities;


• want to minimize or completely eliminate the influence of centralized intermediaries and regulatory risks.

Advantages of decentralized exchanges

Decentralized exchanges (DEX) became a key component of the cryptocurrency ecosystem in 2025. Unlike centralized platforms, they provide users with the ability to store their funds directly and trade transparently online. For investors and traders in the US and Europe, DEXs are an attractive alternative due to their key advantages. Let's take a closer look at them.

Increased security and independent storage

• On DEX, users retain control over their private keys, and assets remain in their wallets until the transaction is completed. This significantly reduces the risk of hacking or counterparty bankruptcy.


• The appeal of the non-custodial DEX model is growing amid high-profile news stories about hacks and thefts from users of centralized crypto platforms.

Decentralization and sustainability

• DEXs operate on blockchain networks, which means that no single organization can shut them down. Even if one interface is blocked, users can often interact directly with smart contracts.


• This resilience makes them less vulnerable to regulatory control and government confiscation compared to centralized platforms.

Lower trading commissions and transparent costs

• Most decentralized exchanges charge simple protocol fees (e.g., 0.05–0.30% per trade on Uniswap v3/v4) with no additional fees or withdrawal fees.


• On layer-2 networks such as Arbitrum, Optimism, or Base, the average transaction fee in 2025 fell below $0.10 per swap, making trading on decentralized exchanges significantly cheaper than on the main Ethereum network.

A wide range of offerings and faster innovation

• Decentralized exchanges offer thousands of tokens, ranging from blue-chip assets to new DeFi projects, often before they appear on centralized exchanges.


• In August 2025, Uniswap reached a monthly trading volume of $111.8 billion, capturing a 35.9% market share among decentralized exchanges (DEX).


• The fast listing and liquidity provision model gives users early access to tokens and DeFi primitives.

Integration with the DeFi ecosystem

• DEX capabilities include not only spot trading, but also farming, staking, lending, and participation in liquidity pools, which are not available when using centralized crypto exchanges.


• In mid-2025, the number of active wallets in the DeFi world exceeded 14.2 million, and the weekly transaction volume exceeded $48 billion.

Reduction of regulatory risks

• Despite tighter regulation of DeFi, particularly under the EU's MiCA program, DEXs remain less vulnerable to direct control as they have no centralized depository or operators.


• For users concerned about censorship, transaction freezes, or sudden delisting, DEXs provide a greater guarantee of open access.

Disadvantages of decentralized exchanges

Despite their rapid growth and increasing popularity, decentralized exchanges have a number of significant drawbacks. It is important to consider these when making choices for future trading and investing.

Difficulty of use

• Managing wallets, private keys, and gas fees requires technical knowledge that many beginners lack.


• Even small mistakes, such as sending tokens to the wrong contract, can result in the irretrievable loss of funds.

Liquidity constraints

• While leading decentralized exchanges Uniswap and PancakeSwap process over $100 billion monthly, many smaller DEXs struggle with liquidity.


• When trading niche tokens or large transactions, users may encounter slippage of more than 3–5%, making DEXs less attractive to institutional investors.

Higher gas fees and lower speeds

• Transactions on the main Ethereum network remain expensive during peak periods. In early 2025, the average gas fee on Ethereum exceeded $15 per swap, which led to the displacement of small retail traders.


• Second-layer solutions such as Arbitrum and Optimism have reduced the average cost of transactions on DEX to less than $0.10, but cross-chain bridging fees remain high.


• Transaction speed also depends on network congestion — during peak market prices, confirmation times can delay critical transactions.

Limited support for fiat currencies

• Most decentralized exchanges only operate within the cryptocurrency ecosystem. Direct deposits and withdrawals in US dollars, euros, or pounds sterling are not supported, forcing users to rely on centralized exchanges or third-party platforms to deposit fiat currencies.


• This makes decentralized exchanges less convenient for beginners in the US and Europe, where legislation requires strict KYC/AML checks for fiat services.

Smart contracts and technological risks

• Decentralized exchanges use smart contracts, which may contain errors or vulnerabilities.


• Even well-tested protocols remain vulnerable to new attack vectors, making DeFi security a constant challenge.

Centralized crypto exchanges versus decentralized ones

Below is a comparative overview of centralized and decentralized crypto exchanges based on key parameters.



Both centralized and decentralized exchanges have their own characteristics and drawbacks. When choosing an exchange that suits you, it is important to consider factors such as speed, liquidity, simplicity, innovation, control, risk parameters, etc.

Centralized management and control

According to data from early 2025, centralized exchanges account for more than 70% of cryptocurrency trading volume. At the same time, DEX's market share grew by 7.6% in the first half of this year.




In addition, this year the US passed important laws regulating cryptocurrency activities, including bills such as GENIUS and CLARITY, to ensure clear rules for conducting transactions with digital assets.

Centralized exchanges are managed by a single entity:

• Control is exercised by a single entity or a small group, with all client funds being managed, all transactions recorded, and all trades executed.


• There are risks associated with custodial management, as clients are forced to entrust their capital to the exchange.


• Compliance with regulatory requirements, as CEXs are subject to regulatory oversight under national jurisdiction and international rules.


• Security vulnerabilities – centralized exchanges are attractive targets for cyberattacks, posing a potential threat to user data and deposits.

Decentralized exchanges have distributed governance:

• Operations are based on blockchain networks, and control is implemented through a decentralized network of nodes.


• Enhanced security – customers have complete control over their private keys, which reduces the risk of centralized hacks.


• Low trading fees: the absence of intermediaries reduces transaction costs.


• Complexity of use – the decentralized nature of exchanges often requires a high level of technical knowledge from customers.

Consensus mechanisms

Consensus mechanisms of decentralized exchanges are protocols that ensure that all nodes in the blockchain network agree on the validity of transactions.

There are two main types of mechanisms:

1. Proof-of-Work – it requires participants (miners) to solve complex mathematical problems to verify transactions and create new blocks. This method is energy-intensive, but its security has been proven over time;


2. Proof-of-Stake – validators are selected to create new blocks based on the amount of cryptocurrency they own and are willing to provide as collateral. PoS is more energy-efficient and scalable compared to PoW.

The choice of consensus mechanism affects various aspects of DEX, namely:

• Security – PoW provides high security due to the computational costs required to change the blockchain, while PoS provides security through economic incentives.


• Scalability – PoS provides better scalability by supporting higher transaction throughput and more complex blockchain applications than PoW networks.


• Energy efficiency – PoS consumes significantly less energy compared to PoW, making it more environmentally friendly and sustainable.


• Ease of use – PoS systems can provide faster transactions and lower fees.

Blockchain technology

Blockchain is a fundamental technology that underpins cryptocurrencies, decentralized exchanges (DEX), and smart contract-based applications. It provides a secure, decentralized, and transparent structure for recording transactions and enabling trustless interactions.

The essence of how blockchain technology works:

• Ledger and blocks: Blockchain is a distributed ledger consisting of a chain of blocks, each containing a packet of transactions. Once a block has been verified and added, the data cannot be changed.


• Consensus mechanisms: Blockchains use consensus methods to agree on which transactions are valid and in what order. These are necessary for security, decentralization, and censorship resistance.


• Smart contracts: These are pieces of code stored on the blockchain that automatically execute when certain conditions are met. They enable decentralized applications (dApps), automated financial instruments (DeFi), and decentralized governance;


• Nodes and network distribution: multiple independent nodes (servers/validators) store copies of the ledger, verify blocks, and relay transactions, ensuring decentralization and resilience.

At the beginning of 2025, the global blockchain technology market was valued at $57.72 billion. This is 1.8 times more than in 2024. Experts predict that it will grow to $1,431.5 billion by 2030, assuming an average annual growth rate of 90%.




At the beginning of 2025, the smart contract market was valued at $3.21 billion. This is 1.22 times more than in 2024. By 2029, it is projected to grow to $7.45 billion.




Today, nearly 560 million people worldwide use blockchain technology. That's almost 4% of the world's population. The largest share of users is in Asian countries.

How to choose the right cryptocurrency exchange

Here are some key recommendations to help you choose the right type of crypto exchange:

• Beginners are better off choosing a centralized crypto exchange due to its simple interface, access to fiat currencies, high security, and clear fees.


• To gain full control over your capital, it is recommended to choose a decentralized exchange, which provides guarantees of confidentiality, access to DeFi tools, and new smart contract opportunities.


• If you are looking for the perfect balance, then it is worth diversifying your capital by using the services of both centralized and decentralized exchanges.

Experts predict that the ratio of DEX and CEX spot volumes will grow, exceeding 0.30 in the coming months. At the same time, new regulatory rules will push centralized exchanges to increase transparency and audit procedures, thereby gaining the trust of a wide audience of customers.

Centralized and decentralized exchanges: examples of use

The choice between centralized and decentralized exchanges often depends on individual goals, trading experience, and regulatory requirements. In practice, both models perform different but complementary functions in the cryptocurrency ecosystem.

Platforms such as Coinbase, Binance, and Kraken provide direct access to USD, EUR, and GBP, allowing users to purchase Bitcoin, Ethereum, or stablecoins using credit cards or bank transfers.

In 2025, more than 72% of institutional cryptocurrency transactions in the US were conducted through centralized exchanges due to their compliance and custody services.

Decentralized exchanges such as Uniswap, PancakeSwap, and Curve allow users to exchange tokens directly from their wallets. Access to DeFi applications opens up opportunities for profitable farming, staking, and participating in liquidity pools, thus creating new sources of income for customers.

Future trends in the crypto exchange market

As of 2025, both centralized (CEX) and decentralized (DEX) crypto exchanges are developing rapidly. In the coming years, we will see a number of overlapping trends driven by regulation, technology, institutional adoption, and market demand. Let's take a closer look at them.

Market and revenue growth forecasts

It is expected that the global cryptocurrency exchange market will be worth $71.35 billion in 2025 and will grow to approximately $260.17 billion by 2032, with a compound annual growth rate (CAGR) of approximately 20.3% during the period 2025-2032.




Revenue for crypto exchanges in 2025 is expected to reach $54-71 billion depending on trading activity, regional adoption, and products offered.

Growth in the share and influence of decentralized exchanges

In the second quarter of 2025, the ratio of spot trading volumes on DEX and CEX reached a record high of 0.23 ($877 billion and $3.9 trillion, respectively). This was driven by a roughly 25% increase in trading volume on decentralized exchanges compared to the previous quarter and a roughly 28% decline in trading volume on centralized exchanges over the same period.

Legal framework

The European Union's Markets in Crypto-Assets Regulation (MiCA) introduces licensing requirements for crypto-asset service providers (CASP), stablecoins, as well as rules on transparency, disclosure, and consumer protection.

In the US, the GENIUS Act, passed in July 2025, brought greater clarity to regulation, particularly with regard to stablecoins, aligning in some respects with the European Union's regulatory approach and reducing regulatory arbitrage.

Tokenization and real-world assets

The tokenization of real-world assets (RWA) is expected to accelerate. In Coinbase's 2025 forecast, RWA (real estate, corporate bonds, commodities, etc.) is identified as a key trend. The volume of tokenized real-world assets in 2025 has grown by more than 60%, reaching approximately $13.5 billion.




Stablecoins are increasingly being used outside of trading, in global capital flows, commerce, and payments. The market capitalization of stablecoins has grown from $130.5 billion to $204.5 billion by 2025.