Decentralized exchanges are undervalued and gaining ground, with volumes reaching all-time highs.
These are the findings of Messari researcher Kunal Goel, who said that centralized exchanges (CEXs) are listing tokens too late in a post on X on August 13.
He added that they are becoming a “dumping ground for VCs,” and retail will sooner or later learn that it must stop participating in this dynamic.
DEX Giving retail traders a better chance to buy new tokens as they are listed early, he said.
DEXs are being ignored.
CEXs are listing coins too late and are becoming a dumping ground for venture capitalists. Sooner or later, retail will learn and stop participating in this dynamic.
On the other hand, DEXs list coins early, giving retailers a chance to buy.
🚀 As expected, DEX… image.twitter.com/Vbd472m2x6
— Kunal Goel (@kunalgoel) August 13, 2024
DEXs could improve
The researcher said that DEXs have several advantages over CEXs, including a better on-chain user experience in terms of speed and cost, as well as better wallet integration and reliability.
A DEX does not stop during times of market turbulence, whereas centralized exchanges, such as Coinbase, can experience outages during periods of peak volume. However, DEX token values have not reflected these advantages, with many of them falling to bear market levels.
Goel said this could change for several reasons. First, DEXs leak miner-extractable value (MEV), so holding it would give them additional revenue.
New tokenomic models are being developed to capture and distribute cash flows, and the potential integration of features such as perpetual trading could also give DEXs a boost. He concluded with a prediction that all assets will be tokenized on DEXs in the future.
“DEXs are fundamental financial primitives and perhaps the most successful product of cryptocurrencies. Currently, they serve circular crypto speculation, but in the future, all assets will be tokenized and on DEXs.”
DEX volumes are set to increase in 2024
According According to DeFiLama, the daily volume of DEXs is around $5.25 billion. It has more than doubled since 2023, when average daily volumes were close to $2 billion. In terms of market share, DEXs currently hold around 21% of the cryptocurrency exchange market compared to their centralized counterparts.
Uniswap is the largest DEX, with $1.48 billion in daily volume and a 28% market share. PancakeSwap is second, with around $600 million in daily volume and an 11.6% share of the DEX market.
CoinGecko has a slightly lower total daily volume figure for decentralized exchanges at $4.65 billion, but also lists Uniswap as the market leader.
It is reported that DEX Token market cap of $14 billion, representing just 0.6% of the total cryptocurrency market.
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