A centralized exchange (CEX) is a platform that acts as an intermediary between buyers and sellers. Users deposit their assets onto the exchange, and then trades are conducted on the exchange’s order book. Centralized exchanges are owned and operated by a single entity, and they typically take custody of users’ assets. Examples of centralized exchanges include Binance and Coinbase.
A decentralized exchange (DEX) is a platform that enables the direct peer-to-peer trading of assets without the need for a central intermediary. In a DEX, users retain control of their own assets and trades are executed on a blockchain using smart contracts. Examples of decentralized exchanges include Uniswap and Kyber Network.
In summary, a centralized exchange has a central point of control and a centralized entity that operates it, whereas a decentralized exchange utilizes smart contracts on a blockchain and operates on a decentralized network with no central point of control.