How do Centralised exchange and On-chain DeFi compare on custody?

Centralised exchange: Exchange holds assets. On-chain DeFi: You hold keys via wallet.

How do Centralised exchange and On-chain DeFi compare on kyc?

Centralised exchange: Required for most fiat rails. On-chain DeFi: Not required at protocol level.

Centralised exchange: Spot, perps, earn, staking. On-chain DeFi: Lending, DEX, LST, perp DEX.

When to use a CEX versus a non-custodial wallet and DeFi protocols — custody, fees, KYC, and composability compared.

Updated June 2026

Option A

Centralised exchange

Option B

On-chain DeFi

Criteria	Centralised exchange	On-chain DeFi
Custody	Exchange holds assets	You hold keys via wallet
KYC	Required for most fiat rails	Not required at protocol level
Products	Spot, perps, earn, staking	Lending, DEX, LST, perp DEX
Composability	Siloed account balances	Protocols stack (e.g. LST → lend → borrow)
Counterparty risk	Exchange solvency/regulatory	Smart contract + oracle risk

Verdict

CEXs suit fiat on-ramps and simple spot trading; DeFi suits self-custody, composable yield, and permissionless access — many users combine both.

Market data changes frequently. For live TVL and rates, see our DeFi tools.