Decentralized exchanges play a crucial role in the broader cryptocurrency ecosystem. They facilitate the trading of and swapping between assets without constraints. It is a matter of time until the DEXes generate a combined $1 trillion in 12-month volume, and that may even happen this year.
The Ongoing Growth Of DEX Trading
It is not entirely surprising to see decentralized exchanges gain such a high market share lately. While centralized trading platforms remain ever-popular, many users explore other options. Unlike a centralized platform, a DEX can offer trading pairs and swaps that would otherwise require one or multiple intermediary “hops.” Convenience is crucial in the crypto world, and users will go wherever they can trade freely without restrictions.
Moreover, it is crucial to note there are more decentralized exchange opportunities than before. On the one hand, there are still new platforms coming to market. A competitive ecosystem is crucial to fuel further innovation and improvements. On the other hand, there are also existing DEXes exploring cross-chain functionality. It broadens the ecosystem, introduces opportunities for other assets, and creates a better overall trading experience.
Today, the DEXes combine for over $900 billion in 12-month volume. An impressive statistic, considering how the monthly volume was relatively low for most of 2020. Things only started picking up in January 2021 and beyond, with a massive peak in May of this year. Those levels have not been reached again, although the industry is still in a very good place.
Moreover, it appears that reaching $1 trillion and more in 12-month volume will occur relatively soon. The monthly volume for August, November, and December 2020 was relatively low. These days, DEXes generate over $70 billion in monthly volume. With that average, it should take until late November to reach that $1 trillion mark. An impressive development for an industry few people thought could survive two years ago.
Sustaining Growth is Crucial For DEXes
Although the May 2021 volume peak still baffles many, it is essential to look at the bigger picture. Sustaining over $120 billion in monthly volume is, under the current circumstances, impossible. However, all DEXes combine for a much higher monthly volume compared to 2019 and 2020. That trend is visible all year long and should run until the end of the year with ease.
The bigger question is which platform will offer some competition against Uniswap. So far, that has been a tough task for all other DEXes. Sushiswap is the only other decentralized platform surpassing $10 billion in monthly volume. Curve, 0x Native, DODO, Balancer, and Bancor Network will need to step up their game to remain competitive. Unfortunately, it appears those protocols all struggle to captivate users and their liquidity.