Unit 4 · Level 1 · The crypto map
CEX vs DEX
A centralized exchange (CEX) is a company: it matches buyers and sellers in an order book and holds your coins for you. A decentralized exchange (DEX) is just code on a blockchain: you trade against a pool of tokens priced by a formula, straight from your own wallet. Convenience versus control: pick your trade-off.
Free to play. No ads, no token, no account needed to start.
What you get asked
Match each term to what it actually means
A CEX works like a stock exchange with a custodian attached. A DEX replaces both the matchmaker and the custodian with code.
You buy ETH on a big centralized exchange and leave it there. Who actually controls those coins?
On a CEX your balance is an entry in their database, a promise. Mt. Gox's customers held the same promise right up until 850,000 BTC vanished.
In a small AMM pool, a big trade moves the price against you while it executes, and that gap between expected and actual price is called ___.
Slippage: the difference between the price you saw and the price you got. Small pool plus big order equals a painful surprise.
Why does a €50,000 trade in a tiny DEX pool get a much worse price than on a deep CEX?
An AMM reprices continuously as the pool's balance shifts. Draining a big share of a small pool makes each additional token cost more. That's slippage in action.
No one can freeze or reverse your DEX trade. Why does that cut both ways?
The same censorship-resistance that stops anyone blocking your trade also means a mistyped amount or a scam token swap is final. On a DEX, YOU are the safety net. 🐜
The rest of this unit
BTC, ETH, alts, stablecoins, CEX vs DEX: the whole territory.