Although decentralized exchanges (DEXs) are becoming key players in the cryptocurrency world, recent reports indicate a significant shift in their market share relative to centralized exchanges (CEXs). According to a new analysis by crypto analytics firm Kaiko, DEX trading volumes grew significantly in November, reaching $29 billion.
The recovery marks a recovery from multi-year lows observed in September, but still stands in stark contrast to the all-time high of about $124 billion reached in May 2021, Kaiko said.
Changes in cryptocurrency market share: DEX vs. DEX CEX
The growth in DEX volume, while impressive, appears to have been less influenced by major platforms such as Uniswap and Curve on the Ethereum blockchain and PancakeSwap on the BNB chain, which have seen relatively muted growth.
The dynamics between decentralized and centralized exchanges are evident in market share data. In November 2020, when public interest in decentralized finance (DeFi) in the crypto industry peaked, DEXs captured 10% of the market share of total trading volume.
However, this figure has been steadily declining, from 5% in January 2023 to just 3% in November of the same year. The decline in market share becomes even more pronounced when examining specific exchanges.
For example, the largest DEX Uniswap has about 40% market share relative to the leading CEX Coinbase. While this comparison shows the importance of Uniswap, it also highlights the gap that still exists between decentralized and centralized trading models.
Meanwhile, Binance’s spot market share has dropped from 55% at the beginning of the year to 30.1% this month, according to CCData.
Binance’s stock price decline and DOJ’s tighter regulation
The decline in Binance’s spot market share is a key factor to consider. This change seems to be particularly driven by regulatory challenges and legal issues faced by former CEO Changpeng Zhao.
Recently, the U.S. Department of Justice (DOJ) was granted broad oversight of Binance following a $4.3 billion settlement. John Reed Stark, former SEC Internet Enforcement Director, shed light on the development in an X post, noting that the U.S. government now has significant control over Binance’s operations.
Breaking News: Double Whammy for Binance.
1) Newly released DOJ documents could spell the end for Binance;
2) The SEC filed a supplemental complaint against Binance, significantly strengthening the SEC’s lawsuit against Binance.
This unprecedented level of scrutiny means Binance needs to implement strict compliance measures across its policies, procedures, and internal controls, impacting its customers and third-party relationships.
