DEX crypto a long way from CEX on volume

The trading volume on decentralized cryptocurrency exchange platforms (DEX) is still much lower than that recorded by centralized platforms (CEX).

According to a recent Kaiko data brief, the centralized exchanges such as Binance and Coinbase still account for the majority of crypto trading volume, with around 97% market share.

By the end of 2020, “at the height of enthusiasm for DeFi “Decentralized exchange protocols such as Uniswap, Curve and PancakeSwap had managed to capture 10% of total sales. This fell to 3% at the end of November, compared with 5% at the start of the year.

Monthly volume on DEX meanwhile climbed back to $29 billion last month, a level still a long way from that seen in spring 2021 at over $120 billion.

DEX volume has always been significantly lower than CEX volume, but the recent rally has caused a slight increase in activity, albeit at a slightly slower pace on the most liquid platforms,” says Kaiko in its report.

The collapse of FTX at the end of 2022 had seemingly revived activity on DEXs, which unlike CEXs allow traders to maintain control over their digital coins. Despite the surprise bankruptcy of the SBF platform, JPMorgan believed at the time that the majority of trading volume would remain on centralized platforms.

DEX and CEX each have their own advantages and shortcomings. Broadly speaking, a CEX is simpler to use and offers more liquidity, while a DEX allows self-custody while offering greater transparency and privacy.

In November, several DEXs raised funds. These included MYX, a crypto derivatives protocol backed by Consensys.

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