Sarah Tran
Independent Analyst
- DEXs dwarfed centralized exchanges as DeFi trading volume saw a surge of around 550% this year.
- The total number of active exchanges, including those that are centralized and decentralized, has tapered off.
- DeFi users process larger transactions than users from centralized exchanges, as DEXs are more prevalent in countries with more established crypto markets.
Decentralized exchanges (DEXs) have seen a rapid surge in popularity compared to their centralized counterparts, with value on large DEXs including Curve, Uniswap and PancakeSwap growing by 550%. On the other hand, the total active cryptocurrency exchange has been declining after rising steadily since 2019.
Active crypto exchanges decline while DeFi takes off
Since 2019, decentralized exchanges have grown massively, while the total number of active exchanges, including centralized ones, have plunged during this period. The number of active exchanges has dropped from 845 in August 2020 to 672 in August this year.
According to Chainalysis, the digital asset exchange competition has intensified, as users have growingly favored exchanges that can provide high innovation and scalability.
The report added that DEXs have become increasingly popular, growing in tandem with the DeFi industry.
Comparatively, DEX users process much larger transactions than centralized exchange users, most likely because DeFi is more popular in countries with larger and more established crypto markets. According to David Gogel, the growth lead at DEX dYdX, DeFi users are usually experienced crypto investors or traders who are looking for “new sources of alpha.”
Although the number of centralized exchanges has diminished, the growth in value received between August 2020 to August 2021 has significantly climbed at large centralized crypto exchanges in offerings including derivatives, spot, fiat-to-crypto and crypto-to-crypto.
The report highlighted that most users will usually acquire their first cryptocurrency through centralized exchanges as cryptocurrency adoption grows. They usually provide the most convenient gateway to exchange fiat currency for digital assets.
In addition, the value of large DEXs, including SushiSwap, recorded a 500% growth compared to last year. Other decentralized exchanges, including Curve, Uniswap and PancakeSwap, witnessed a growth of around 550%.
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