DEX Trading Activity Picks Up Steam as Markets Spurn Centralization

Decentralized exchange trading activity has begun to pick up steam, with some of the DEX sector’s biggest players booking a notable bump in trading volumes this week.

Ethereum-based Uniswap was leading the pack toward the end of the work week in New York, hovering around the 50% mark of total DEX volume, equating to a week-over-week double-digit jump to around $12 billion, data from DeFiLlama shows.

Its closest rival, PancakeSwap was holding steady around 8% via the same market cap metric — up about 20% since the week prior, clocking in around $2.1 billion. The DEX still leads on trader count on Binance’s BNB Chain.

Notable DEXes Curve and SushiSwap have also seen significant increases in trading volumes,  jumping 12% and 63% respectively, in the last seven days through early Friday morning in New York. 

Average increase for volumes across all DEXes popped 16% or so on the week. 

Unlike centralized exchanges, which are run by a single entity, decentralized rivals are built on decentralized infrastructure — including smart contracts — allowing traders to swap assets directly with one another, eliminating the need for an intermediary. 

Their popularity has continued to grow following the fourth quarter collapse of the centralized FTX — leaving the funds of retail and institutional investors alike frozen to this day.

Decentralized exchanges that were battle-tested last year, have come out on top, according to Toby Chapple, head of trading for the Australian trading firm Zerocap.

“The use of smart contracts on public blockchains cures a large part of counterparty-related issues related to centralized single-point entities,” Chapple told Blockworks. “The smart contracts themselves handle the crisis exactly as the rules that govern them said they would — they liquidated market participants as per the terms of the DEX.”

That’s now especially true for some market participants up in arms over the SEC’s move against centralized entity Kraken to shutter its US staking operations. Hester Peirce, a long-tenured SEC commissioner, went as far as to blast her own agency as “paternalistic” and “lazy” in terms of Gensler’s most recent crypto crackdown. 

The centralized exchange settled with the SEC without confirming, nor denying fault, and agreed to pay a $30 million fine in the process.  

“Staking is never going away,” Bill Hughs, senior counsel and director of global regulatory matters at ConsenSys, told Blockworks in a statement. “Access to it will only grow because that is what people all around the world will demand.”

Staking remains crucial to scores of proof-of-stake networks, providing a mechanism for reaching consensus — and providing reward-based incentives to validate transactions and ensure a blockchain’s stability and security. 

DAO governance participants — and other individuals looking to accrue cryptocurrencies outside of the scope of regulatory scrutiny — have continued to tap DEXes in large numbers as an alternative to centralized routes. 

The sentiment appears to be increasing, according to Chapple, as exchanges continue to roll out offerings designed to win over user trust, even considering current complications.

“Going forward, the growth of DEX’s will need to address the smart contract vulnerabilities to hacking risk that seems to still plague the industry from time to time, before mainstream adoption by TradFi can be contemplated,” Chapple said.

---

Get the news in your inbox. Explore Blockworks newsletters:

• Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
• Empire: Start your morning with the top news and analysis to inform your day in crypto.
• Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
• 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
• Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
• The Drop: For crypto collectors and traders, covering apps, games, memes and more.
• Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.