The shift from centralized exchanges to DEXs

cointelegraph.com:

Centralized exchanges have been the dominant force on the cryptocurrency landscape for over a decade, acting as the primary method of transferring value between blockchains and serving as a gateway into crypto for the masses. They have been instrumental in the early development of the nascent crypto sector, with many reaping substantial profits. Binance’s revenue, for example, hit $12 billion in 2022, a ten-fold increase in just two years.

However, the success of centralized exchanges has come at a cost. Not only has their dominance placed an unnecessary financial burden on users, but I would argue that the custodial nature of CEXs has hindered the development of the Web3 ecosystem. The growth of DeFi has happened in spite of the CEXs’ stranglehold, with users relying on non-custodial wallets to access even the most basic of DeFi products.

Fortunately, the shift from centralized exchanges to DEXs is gaining momentum. In the immediate aftermath of the SEC’s crackdowns on Binance and Coinbase, DEX trading volumes surged 444%. Even without such seismic events, users are increasingly seeing the value of DEXs. Uniswap trading volume has consistently outpaced that of Coinbase so far in 2023 before the SEC formally announced proceedings against the centralized exchange.

As crises continue to engulf centralized exchanges, the pendulum is increasingly swinging towards its decentralized counterparts. While CEXs remain dominant in terms of market share — for now — the growing interest in DEXs has, in my opinion, the great potential to upend the status quo and open up the full potential of the Web3 economy.

The collapse of FTX may have represented a low point for centralized exchanges, the culmination of years of questionable practices