The CEOs of Bitget and Deribit debate the future of DEXs and CEXs

Can CEXs and DEXs coexist and thrive alongside each other as the crypto market continues to scale and expand?

At The Block's Emergence conference on December 6, leaders from Deribit and Bitget discussed how decentralized exchanges (DEXs) and centralized exchanges (CEXs) can coexist in the highly competitive crypto space.

Trading volumes on DEXs hit $300 billion in November, surpassing the previous high of $260 billion recorded in May 2021.

This raises the question: Can DEXs and CEXs coexist and thrive alongside each other as the cryptocurrency market becomes increasingly vast and complex?

According to research from The Block, the trading ratio between DEXs and CEXs reached 11% in November, up from 9.3% at the start of 2024 and a mere 0.04% at the beginning of 2020. While DEXs still hold a relatively modest share of the market, their growth trajectory is remarkably rapid.

According to Gracy Chen, CEO of the Bitget exchange, CEXs and DEXs cater to different customer segments, meaning their coexistence will largely depend on addressing the unique needs of each audience and carving out distinct niches within the market.

"Centralized exchanges offer better liquidity, superior customer service, and a more seamless user experience compared to DEXs,"

-- Gracy Chen explained --

This makes centralized exchanges the ideal destination for retail and institutional investors. Meanwhile, DEXs primarily cater to professional traders in the DeFi space, who are seeking opportunities with tokens not yet listed on centralized platforms.

Gracy Chen also acknowledged that the regulatory landscape plays a crucial role in shaping market dynamics, particularly for small and medium-sized enterprises. She predicted that large exchanges would continue to grow stronger, while smaller platforms would gradually lose market share and be forced to exit the space.

Meanwhile, Luuk Strijers, CEO of Deribit, expressed skepticism about the sustainability of many trading platforms due to regulatory pressures. He argued that many platforms would be forced to shut down, either because of high operational costs or enforcement actions by regulators.

Luuk predicted that only a handful of exchanges would thrive as the crypto industry expands and regulatory frameworks become clearer and more stringent.

Alain Kunz, Head of Business Development for Europe at GSR, provided insights into the relationship between liquidity dynamics and regulatory frameworks. He emphasized that DeFi faces significant challenges in scaling to gain acceptance from institutions, especially in Europe.

In an ideal world, liquidity attracts liquidity. However, Kunz argued that this is difficult to achieve because regulated banks or trading firms in Europe must interact directly with traders.

Meanwhile, the core of DeFi involves conducting transactions entirely through smart contracts, where buyers and sellers do not have any knowledge of each other’s identities. For DeFi and DEXs to grow, Kunz believes that countries need to change regulations, focusing on the essence of the transaction rather than other factors.

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