The rise of decentralized exchanges was short-lived and most decentralized exchanges fell short of expectations. market watchers of FTX had expected an increase in the use of decentralized exchanges following its crash, but analysts Uniswap like many of DEX said it offers a less user-friendly experience than centralized ones.
Coinbase Trading Volume Overtakes Uniswap, Failing DEX Expectations
Cryptocurrency exchange Coinbase has surpassed popular decentralized exchange platform Uniswap in trading volume this year.
He said that as of Friday, Coinbase’s trading volume had risen to over $185 billion, nearly double the $93 billion on Uniswap. At one point in 2022, the respective volumes of the exchanges were nearly equal.
After the collapse of the FTX exchange and other centralized entities in the crypto ecosystem last year, market watchers expected more investors to turn to decentralized exchanges (DEXs).
At some point in 2022 this shift seemed to be happening. However, DEXs posed challenges for users.
Research analyst Conor Ryder said calls for switching to DEXs seem “a little premature” because centralized exchanges (CEXs) still play a critical role in getting the average investor into the system.
In a note last November, JPMorgan strategists noted that slower transaction speeds, pooling of assets, and order traceability features could limit institutional participation.
Analysts cited the lack of limit order/stop loss feature in DEXs, their dependence on price oracles that receive data from centralized exchanges, their vulnerability to hacks, exploits, the need for over-collateralization, and systemic risks from automated liquidations as barriers to widespread adoption.
*Not investment advice.
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