While decentralized exchanges (DEX) were considered to the future of cryptocurrency exchanges, they somehow seem to have lost their charm. According to the recent report from Diar, decentralized exchanges have now hit an all-time low in terms of US dollar traded value, as well as Ether transaction on-chain.
Are Decentralized Exchanges Just A Fad or Do They Have A Future?
According to the data presented by Diar Research in its latest report, it looks like DEX’s have hit a roadblock. The data put forward shows that as on June 2017, when DEX first began appearing online, a total of $8.9Bn was been traded on-chain. But that figure dipped last year to just pipping over $7.1Bn. While the dipping from 2017- 2018 was still minuscule the first month of January has only been able to volumes of $49Mn for the month of January – to-date, an all-time new low for DEX’s
To give a comparative perspective, these reported volumes for January 2019, as less than a tenth of what the largest centralized exchange Binance trades, alone, on a daily basis. At this run rate, DEX’s will be able to garner around USD 600 million of on-chain volumes which would be a significant dip from last year.
It’s not just volumes in dollar terms, the other metrics such as Ether transaction on-chain and unique addresses have also hit a new low. To quote from the report
“In terms of Ether, this month is a mere third of what was traded on Ethereum DEXs in January 2018. At the peak, over 2.3Mn ETH was traded in May 2018 – now down to 400K.”
Have Binance, OKEx and Bithumb got their strategies wrong?
Considering the demand and the hype built around the future of DEX’s a lot of centralized exchanges had announced their plans to enter the space. To name a few, Binance had already shown a short demo of their platform. OKEx’s Open Ledger DEX is already launched, as has Bithumb’s DEX. Coinbase too, last year purchased Paradex with the same vision of a decentralized exchange holding keys to the future. But none seem to have been able to get customers of their respective DEX’s despite the fascinating model of low or no fees.
And now with further tightening of the situation, there is further speculation that DEX’s may just find it too difficult to pick up. While a lot of crypto prodigies on the street have spoken in favor of DEX’s maybe they need some more time to flourish.
Will DEX pick up or would they fade out? Do let us know your views on the same.
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.