Centralized vs decentralized exchange
"Centralized cryptocurrency exchanges act as an intermediary between a buyer and a seller and make money through commissions and transaction fees. You can imagine a CEX to be similar to a stock exchange but for digital assets.
Much like stock trading websites or apps, these exchanges allow cryptocurrency investors to buy and sell digital assets at the prevailing price, called spot, or to leave orders that get executed when the asset gets to the investor’s desired price target, called limit orders.
CEXs operate using an order book system, which means that buy and sell orders are listed and sorted by the intended buy or sell price. The matching engine of the exchange then matches buyers and sellers based on the best executable price given the desired lot size. Hence, a digital asset’s price will depend on the supply and demand of that asset versus another, whether it be fiat currency or cryptocurrency.
CEXs decide which digital asset it will allow trading in, which provides a small measure of comfort that unscrupulous digital assets may be excluded from the CEX."
"A decentralized exchange is another type of exchange that allows peer-to-peer transactions directly from your digital wallet without going through an intermediary. Examples of DEXs include Uniswap, PancakeSwap, dYdX, and Kyber.
These decentralized exchanges rely on smart contracts, self-executing pieces of code on a blockchain. These smart contracts allow for more privacy and less slippage (another term for transaction costs) than a centralized cryptocurrency exchange.
On the other hand, even though smart contracts are rules-based, the lack of an intermediary third party means that the user is left to their own, so DEXs are meant for sophisticated investors."