Decentralized Exchange Platforms “DEX” Grow by 550% in 2021


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The DeFi sector has seen a massive influx of money into its ecosystem in 2021 alone.

The trading activity of the large decentralized exchange “DEX” increased by more than 500%, exceeding the trading volumes of the popular central cryptocurrency exchange “CEX”, according to a new report issued by the analytics company “Chynalysis”.

2021 is the year of decentralized trading platforms:

slattered the report Highlighting the fierce competition among central trading platforms this year, as traders search for the best platforms to trade with the cryptocurrency boom since January.

The volume of transactions on cryptocurrency exchanges has increased significantly throughout the year, and although it is not consistent, it shows an overall upward trend.

DEX has outperformed centralized exchanges, with big protocols like Curve, PancakeSwap, and Uniswap up 550% during Q1 and Q2 of 2021.

Decentralized exchanges have been the most active platform compared to other business models since the first quarter of 2019.

The chart below shows the comparison with other business models, such as OTC, derivatives, CEX, and high-risk trading platforms (platforms with minimal KYC requirements).

Cryptocurrency exchange growth by business model.  Source: Chainalysis
Growth of cryptocurrency trading platforms by business model. Source: Chainalysis

Centralized trading platforms fall short of their decentralized counterparts:

During the first quarter of 2021, centralized trading platforms were competing fiercely with the cryptocurrency market boom.

But the number of active trading platforms began to fade later.

Only giant trading platforms such as Binance, Coinbase and Kraken remain competing, as they are the ones leading the market.

The following was stated in the “Chinalysis” report:

This could be for a number of reasons.

New users are probably more likely to hear about the larger exchanges, and therefore flock to them when they decide to buy their first cryptocurrency.

Or maybe the superior liquidity of the bigger trading platforms will attract the biggest traders.

Our analysis indicates that the number of unique cryptocurrencies available plays a large role in the survival rate of trading platforms during the studied time period.

In contrast, the number of DEX and OTC (over-the-counter) platforms increased starting in the first quarter of 2019.

DeFi funding activity has overtaken DeFi during 2021 on centralized platforms, as the total value received by DEX platforms increased from $10 billion in July 2020 to a peak of $368 billion in May 2021.

Institutions coming into the DeFi arena:

The DeFi sector is currently experiencing a boom, with more institutions entering the decentralized finance ecosystem.

What has made decentralized finance more attractive to institutions is the emergence of new Layer 1 protocols with better rates for stablecoins and ETH/BTC pairs.

More institutions are using Ethereum to borrow and lend via various decentralized applications, according to a third-quarter report from crypto company Genesis.

The DeFi sector offers a wide range of technological innovations to serve the financial market.

Multinational companies are trying to test DeFi technologies to take advantage of the momentum around them as well as the potential that they offer to cut the road and save fees.

Read also:

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