DEX tokens returned more than 5x centralized exchange tokens this year amid a slew of major protocol upgrades
Decentralized exchanges have long promised to disrupt traditional venues with the allure of permissionless, non-custodial trading. While true disruption has not yet materialized, investors are increasingly betting on this outcome as the native tokens of nearly every decentralized exchange are dramatically outperforming those of major centralized exchanges.
Just about every single one of the six largest DEXs by volume are up more than 100% on the year making them some of the best performing crypto assets. This includes well-known tokens like Kyber and Bancor as well those more under the radar such as Airswap, Loopring, and IDEX. Centralized exchange tokens are still up on the year but only in the mid-double digits with the exception of OKeX (OKB) up 108%. Part of this could be the fact that centralized exchange tokens are orders of magnitude larger and more liquid than their counterparts allowing for small fundamental changes in DEXs to cause larger price jumps. Nevertheless, it is evident DEXs are seeing heightened interest which comes at a time when two major trends are playing out:
- DEXs are comprising a larger percentage of overall trading volumes
- Major upgrades have or will occur in the near future to further narrow this gap
With respect to the first trend, daily spot volumes have risen from less than $5 million at the start of the year to around $25 million. Not only is the total DEX volume rising, but it’s doing so at a more rapid pace than centralized exchanges as the percentage of overall volume has increased from 0.25% to 0.5%.
