The essential difference between centralized exchanges (CEX) and decentralized exchanges (DEX) is that user funds are Managed or unmanaged. Decentralized exchanges are non-custodial asset exchanges that are generally not controlled by any central entity and generally reduce counterparty risk by eliminating or minimizing the involvement of intermediaries in a variety of ways.

DEX users do not need to hand over control of their assets to any custodian, they can trade directly from their cryptocurrency wallets by interacting with smart contracts. Therefore, DEX is permissionless and does not require KYC, registration and other processes. As long as you have a decentralized wallet, you can use its functions.

Currently, due to the network speed limitations of blockchains like Ethereum, most DEXs (such as Curve, Uniswap, PancakeSwap and Balancer) adopt a method called "Automated Market Maker (AMM)" "The pricing and market-making rules are completely different from the order book matching model. Of course, there are also some DEXs that use the order book model, such as dYdX.

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