Decentralized exchanges (DEX) strongly led in cryptocurrency trading volume in the first half of 2021, but since then, the share of processed transactions has declined and become almost the same as that of centralized exchanges (CEX).
According to the research by analytical company Chainalysis, the trading volume on decentralized exchanges (DEX) exceeds similar indicators of centralized platforms (CEX), but the leadership is insignificant compared to last year’s figures.
The trading volume on DEXs from April 2021 to April 2022 amounted to $224 billion, while centralized platforms could process transactions totaling about $175 billion. Thus, their share of trading volume was almost evenly distributed: 56% accounted for DEXs and 44% for CEXs.
Such a trend has not always been observed. Earlier, DEXs were confidently in the lead. The balance first shifted to decentralized exchanges in September 2020, when CEXs processed less than 50% of all trading volume for the first time. The dominance of DEXs peaked in June 2021, when they accounted for more than 80% of transaction volume.
Chainalysis analysts argue that trading volumes on centralized and decentralized exchanges closely correlate with market performance. The study shows that CEX transaction volume reached an all-time high at the end of 2017 when BTC prices hit another record high. Similarly, DEX and CEX trading volumes soared in 2021 as the cryptocurrency market again saw significant growth. But the recent market downturn has negatively affected trading volumes through both types of exchanges. Interestingly, CEXs have proven to be slightly more resilient to these fluctuations under current market conditions than DEXs.
Chainalysis experts emphasize that the distribution of trading volume on centralized and decentralized exchanges is different. The main difference is that the top five DEXs (Uniswap, SushiSwap, Curve, dYdX, and 0x Protocol) account for approximately 85% of total trading volume in the decentralized exchanges segment. At the same time, the five largest centralized exchanges (Binance, OKX, Coinbase, Gemini, and FTX) process only about 50% of the total transaction volume that CEXs account for.
Whether DEXs can ultimately maintain their leadership in the segment will depend, according to Chainalysis analysts, on a number of factors, including
- whether DEXs can offer lower fees and fairer pricing than their centralized counterparts;
- whether DEXs will be subject to more regulatory scrutiny;
- whether DEXs can convince users of further automation benefits, elimination of intermediaries, and self-service.
Let’s remind that at the end of the previous year, analysts from CryptoRank reported that 6.2% of all BTC in the market are stored in crypto exchange accounts, and in April this year, analytical company CryptoCompare presented the report with the results of comparative analysis of crypto CEXs.
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