The Dominance of Centralized Exchanges Over Decentralized Ones
It is reported that many market observers predict that the use of decentralized exchanges will increase sharply after the collapse of FTX last year, but analys…
It is reported that many market observers predict that the use of decentralized exchanges will increase sharply after the collapse of FTX last year, but analysts say that many users’ experience provided by DEX is not as friendly as that of centralized exchanges. According to a report from Kaiko, a cryptocurrency company, the trading volume of Coinbase, the cryptocurrency exchange, has exceeded the popular decentralized trading platform Uniswap this year. Kaiko said that as of last Friday, the trading volume of Coinbase had exceeded $185 billion, almost twice that of Uniswap’s $93 billion. At some point in 2022, the trading volume of each exchange is almost equal. Conor Ryder, a research analyst at Kaiko, said that the call for a transition to DEX seemed “a bit premature” because the centralized exchange (CEX) still played a key role in attracting ordinary investors.
The trading volume of Coinbase exceeded Uniswap, which ran counter to the expectation of DEX surge
Interpretation of the news:
The world of cryptocurrency has seen significant growth in recent years, with numerous exchanges, both centralized and decentralized, offering trading services to users. While many market observers predicted a rise in the use of decentralized exchanges (DEXs) after the collapse of FTX last year, the reality seems to be different. Analysts now suggest that the experience provided by DEXs is not as user-friendly as that of centralized exchanges (CEXs), which continue to play a crucial role in attracting ordinary investors.
According to a report by Kaiko, a cryptocurrency company, the trading volume of Coinbase, a CEX, has surpassed the popular decentralized trading platform Uniswap this year. As of last Friday, Coinbase’s trading volume stood at $185 billion, almost twice that of Uniswap’s $93 billion. While DEXs have been gaining popularity in recent years, the dominance of CEXs is still evident. In 2022, the trading volume between the two types of exchanges is predicted to be almost equal.
Conor Ryder, a research analyst at Kaiko, suggests that the call for a transition to DEXs may be “a bit premature” because CEXs still play a crucial role in attracting investors. The current user experience provided by DEXs is not as friendly as that of CEXs, leading to a preference for the latter. The lack of user-friendliness can, in turn, impact the ability of DEXs to attract a wide range of investors.
Despite this, the rise of DEXs cannot be ignored. These exchanges provide greater security and privacy in transactions compared to CEXs, which are susceptible to hacks and other security breaches. Additionally, DEXs allow for greater user control over their assets by eliminating the need for a central authority. However, to compete with CEXs, DEXs need to improve their user experience and security measures.
In conclusion, while DEXs have been gaining popularity in recent years, CEXs still dominate the cryptocurrency market. This is due to the greater user-friendliness provided by CEXs, which attracts ordinary investors. However, the rise of DEXs cannot be ignored, and these exchanges need to improve their user experience and security measures to compete effectively with CEXs.
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