Decentralized exchanges (DEX) have become an essential tool for cryptocurrency investors. Over the past 15 months, DEXs have overtaken centralized exchanges (CEX) in terms of on-chain trading volume.
Between April 2021 and April 2022, DEX on-chain trading volume was $224 billion, compared to just $175 billion on CEX. For already 15 months, decentralized exchanges have overtaken centralized crypto exchanges in terms of on-chain trading, which means that they are gaining ground with investors.
The Chainalysis report covers several aspects of the decentralized market and is expected to be released before the end of the current month. The data platform says “DEXs now have a good head start in terms of on-chain trading volume.” That said, the recent market drop has shown CEX to be slightly more resilient.
Currently, the major DEXs in the market are Uniswap, SushiSwap, Curve, dYdX, and the 0x protocol. These crypto exchanges are now considered the best platforms in this booming industry.
Last June, volumes on decentralized exchanges hit all-time highs. These held 80% of the total volume of on-chain transactions. Since then, this trend has faded, as trading volumes are now more evenly split between DEXs (55%) and CEXs (45%).
The dominance of DEXs depends on several factors
The report also notes that there are some behavioral differences between the top 10,000 senders of ETH in DEXs and CEXs. The most glaring difference is the percentage of ETH coming from a CEX. Indeed, 7% of DEX user funds come from a CEX, while 16% of centralized crypto exchange user funds come from another similar platform.
Chainalysis points out, however, that the dominance of DEXs will depend on several factors, namely: fees, regulatory oversight, and changes in the general attitude towards them.
Undoubtedly, DEXs today have a greater weight in the market, especially thanks to their liquidity provision systems that offer attractive rewards. They also offer more flexibility and integrate well with the rest of the decentralized finance (DeFi) market.
However, the specter of more restrictive DEX regulation is growing ever more looming. Indeed, lawmakers are well aware that these platforms are much more difficult to control. Therefore, they are planning to crack down on non-hosted crypto wallets, which could have serious repercussions on the market.
All information on our website is published in good faith and for general information purposes only. Any action taken by the reader based on information found on our website is entirely at their own risk.