Topic: Centralised exchange getting better than Decentralised exchange? (Read 655 times)

I hope you all are having a wonderful weekend!

So I recently came across a post where people are engaged in a lengthy debate over whether CEX (Centralized Exchange) or DEX (Decentralized Exchange) is better. So I decided to wrote down this. Frankly, I believe it's a matter we shouldn't dwell on too much because both have their advantages and disadvantages.

For CEX:

Security is reliable if you choose the right exchange.

Transaction fees are reasonable.

It's user-friendly for trading.

You're less susceptible to phishing scams, especially when using a secure wallet.

Various earning opportunities are available.

Let's consider two exchanges I'm familiar with as examples:

For Binance: Despite suffering a massive $570 million hack, Binance remains one of the largest exchanges and not just that, they still keep their standards high.
You can find more details in this link: https://www.investopedia.com/binance-got-hacked-6748215

Now, Bitget: While Bitget hasn't experienced a direct exchange hack, although there was an incident that occurred with their wallet due to a link shared in a group that led to users' accounts being compromised, I won't really call this hack per se but a lesson to everyone. We all need to be careful of links sent suspiciously in any group you're in because you don't know what you will be clicking that will lead to total wipe pf your assets both in crypto and off crypto

 You can also read about it here: https://www.[Suspicious link removed]

I use Bitget more often because I've delved into their security standards and believe they're doing well. However, I still use Binance, as it was the first CEX I encountered on my crypto journey.

Now, let's talk about DEX:

I won't say DEX is bad; it has its merits. Everything is decentralized, as the name suggests. I've used Uniswap and continue to do so. However, it's essential to note that DEX can also undergo KYC (Know Your Customer) processes, as evidenced by this tweet about Uniswap: https://twitter.com/WhaleChart/status/1713291249560535051?t=lyzx4IAlZNiG9Llt4g-Tqg&s=19

Furthermore, DEX can be vulnerable to hacking. Consider Mixin, for example.

What I'm trying to convey is that these debates about CEX vs. DEX should consider that both can coexist and work well if we find the right balance.

Even if I said ok, I want to go offline to be safer. The truth is, Im not sure I can be 100% safe offline either. I was researching offline wallets on Amazon and watching YouTube reviews for recommendations. At some point, I got discouraged because even some offline wallets can be hacked. But that won't stop me from using an offline wallet. Is just picking the best that I know that would be best for me. Just as picking the best exchanges among cex and Dex.

As I've said before, our security largely rests in our own hands. Before an exchange collapses, there are usually rumors. When those rumors start, it's essential to withdraw your funds promptly. Take FTX as an example; Sam Bankman Fried's actions had a significant impact on the exchange. If you've been following his legal case, you'll see that he meticulously planned it out with no remorse, unlike other exchanges that experienced hacks and returned stronger with enhanced security.

Before a trader could moved their money to exchange I believe they have studied about the exchange security and reliability before leaving a very large funds in that exchange otherwise I can say that there is no experience trader that will possibly want to leave their funds in an exchange they knows nothing about.

You have written a generalized answer that does not reflect the difference between day trading and long-term trading. If a trader is engaged in day trading and he needs 10 thousand dollars to carry it out, then he cannot constantly withdraw this amount and enter it on the exchange. But if he makes a profit from such trading, he will withdraw the profit from the exchange, since he does not need them for trading.

it takes discipline to do it. This includes trading discipline, paying attention to where to place money to trade because CEX cannot be trusted even though they say the funds will be safe and will be guaranteed if lost. Making gradual withdrawals from any profits made will save capital funds entering CEX.
But this does require a fee and maybe it can be scheduled every time the percentage of profit will be made with a withdrawal or some other customized scheduler.

I can't find it deem necessary for user to leave their fund in exchange just because they are keeping it for trading sake, to me what is obtainable is to move your profits from the exchange or move out the capital after which the trader succeeded accumulating enough volumes of profit as it may be. Taking out some percentage of funds always keeps you at the safer side because of numerous rumour concerning hack and security breaching that often happened on centralized exchange. To me if not of gas fee for moving in and out of our exchange account the best is to always withdraw them out when we have exited the trade.

I can't find it deem necessary for user to leave their fund in exchange just because they are keeping it for trading sake...

There are such options when a trader is forced to keep large amounts in the exchange's wallet, since he uses them for trading. In addition, some of the money can be locked up for staking. With the exception of such cases, it is necessary to keep as much money on the exchange account as is necessary for trading.

More regulation will lead to more people being excluded from traditional finance. We already see large swathes of the population being denied from the most popular exchanges due to the country they reside in.

We have seen some cases like FTX where users collectively lost millions or perhaps even billions of dollars. Centralized exchanges aren't necessarily the most secure but at the very least there is some legal recourse if you get scammed or there is a hack. With DEXs it is almost impossible to recover your funds once they are lost although I have seen some exchanges like PancakeBunny try to compensate users in various ways. Neither approach to security makes much difference in my opinion because DEXs will always be preferred by those wishing to circumvent financial censorship that is common in CEXs.

Nope, centralized exchanges is becoming more regulated year by year and that is not a good sign for a trader. centralized exchanges has their own advantages too like high trading volume, more trading pairs, support system and etc but the term better is used to denote the security of funds in my opinion where centralized exchanges can't be trusted no matter what.

If they try that, they will not only be losing customers, their token will crash heavily because even when a team do have a say in a protocol, the community is the biggest contributors to the exchange. The highest they can do is to flag some IP address that will be coming to the exchange but they will not try to implement kyc.

...So, people who keep large funds in exchanges or other platforms are doing the wrong thing themselves and they shouldn't blame the exchanges for that. There are exchanges for trading services and there are wallets for keeping your funds safe, so we should know what should be used for what.

I would prefer to do KYC to ensure that all my coins are safe in a decentralized exchange irrespective of it flaw than hodling my coins in a DEXs exchange whose security of fund is not guaranteed, recall the disappearance of FYX exchange collapsed a year ago with investors funds that is one of the major flaw of CEXs exchange, a lot of investors lost huge amount of crypto, I can't imagine myself hodling some huge fund in such exchange and have a rest of mind, I would rather use them for trading thereafter withdraw every profit earn to DEXs thus saving me from any unforseen future circumstances such as the event that lead to the collapse of FTX exchange.

If Uniswap does implements kyc, i'm sure people will come up with other interfaces to use uniswap's smart contracts that does not require kyc, this is one of perks of being a dex.

Let's unify the functions first, I use dex to buy new tokens which means smart contracts are not available on cex if they are not centralized, that's what I usually do instead of missing a project.

The security factor between the 2 different wallet options, cex like binance is a shared wallet and has a legal umbrella with regulations available in each country that has recognized crypto, as evidenced by the ftx ceo and terraform funders who are guilty and punished meaning their is an identity that is published as from the exchanger team, while non-custodial like bitget wallet is very vague, creepy and security is in full control by yourself. You can choose to trade publicly or trade anonymously with your favourite coins as usual.

Non-custodial exchanges and wallets have many options, you say that with the facts you have encountered, it is good and security can be maximized, vulnerability can be minimized, anticipation is a must.

I don't want to compare which one is better, really for users it depends on their usage skills and choosing the platform that suits their needs. It is more important that you know how to protect yourself against the risks that appear on different platforms, and remember that there is no absolute perfect tool, it depends on your own usage behavior.

The cryptocurrency space is widely popular today, and there are many different attack problems that appear, so don't be too confident that any platform will ensure your assets are always safe, lessons from The past happened a lot from CEX, or DEX, both of which have useful and challenging points for us.

Nope, centralized exchanges is becoming more regulated year by year and that is not a good sign for a trader. centralized exchanges have their advantages too like high trading volume, more trading pairs, support system etc but the term better is used to denote the security of funds in my opinion where centralized exchanges can't be trusted no matter what.

I would prefer to do KYC to ensure that all my coins are safe in a decentralized exchange irrespective of it flaw than hodling my coins in a DEXs exchange whose security of fund is not guaranteed, recall the disappearance of FYX exchange collapsed a year ago with investors funds that is one of the major flaw of CEXs exchange, a lot of investors lost huge amount of crypto, I can't imagine myself hodling some huge fund in such exchange and have a rest of mind, I would rather use them for trading thereafter withdraw every profit earn to DEXs thus saving me from any unforseen future circumstances such as the event that lead to the collapse of FTX exchange.

If Uniswap does implements kyc, i'm sure people will come up with other interfaces to use uniswap's smart contracts that does not require kyc, this is one of perks of being a dex.