Centralized exchanges are operated by companies, which are required by law to acquire industry-appropriate licensing and maintain Know Your Customer (KYC) guidelines, forcing their customers to disclose personal data before they can access the exchange. Conversely, decentralized exchanges allow their users to enjoy the right to privacy and remain completely anonymous. Lastly, decentralized exchanges’ operations are maintained via a distributed network of nodes, unlike their centralized counterparts, which are hosted on company servers.

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The exchange is unable to freeze, lose or manipulate the users’ cryptocurrency for any reason – be it policy, incompetence or malice. Malicious attacks are a major problem for centralized exchanges: in 2019 alone, hackers have managed to steal over $292 million worth of customers’ cryptocurrencies in 12 major attacks. In addition, the lack of central storage for customer funds deprives potential hackers of an easy target. Another advantage of DEXs is their anonymity.

As a result, the former are less prone to server downtime. IDEX – one of the largest options available on the market with over $1.5 million in trading volume and around 400 hundred trading pairs. What Are the Main (www.pipihosa.com) Decentralized Exchanges? However, it is not a truly decentralized exchange, as it still retains some qualities of traditional, centralized exchanges, such as a KYC policy. Buy cryptocurrencies without a third party by exchanging them for the platform’s native BNT token. Bancor – one of its unique features is the users’ ability to sell.

This helps Bancor increase the liquidity of its markets – low liquidity often being a key bottleneck for decentralized exchanges. Binance DEX – a decentralized exchange that was created by Binance, which also operates one of the largest centralized exchanges on the crypto market by trading volume. How Secure Are Decentralized Exchanges? What Are Normal Fees for Decentralized Exchanges? However, different platforms maintain different degrees of decentralization, which means that they are still vulnerable to different extents. Owing to the fact that they don’t hold customers’ funds, DEXs are significantly less susceptible to security breaches than centralized exchanges. As an example, in 2018 hackers exploited a vulnerability in Bancor’s wallet that was used to temporarily hold customers’ funds and made off with $23.5 million worth of crypto.