According to a report by blockchain intelligence firm Diar, published January 28, 2019, the US dollar trading volume in decentralized exchanges (DEXs) has hit an all-time low. This comes at a time when the nascent industry’s thought leaders are pushing for a major transition from centralized exchange platforms to decentralized ones.
Centralized Exchanges Miles Ahead of DEXs
It’s no secret that the global crypto market experienced a dramatic blow-off post its bull run during the first quarter of 2018. The volatile and unpredictable behavior of markets paved the way for a new wave of products and services in the industry, including stablecoins, off-chain scaling solutions, and others.
One such idea heavily pushed throughout 2018 was decentralized exchanges. Staying true to the fundamentals of blockchain technology, decentralized exchanges have been continuously touted as “the next big thing” in the infant industry. However, the figures published by Diar convey an entirely different story.
The report states that DEX trading volume has dropped to an all-time low figure of $49 million for the month of January. To put things into perspective, this figure is less than a tenth of Binance’s daily trading volume.
The story has been pretty similar when it comes to the amount of ether traded on DEXs. Compared to 1.2 million ETH traded on DEXs in January 2018, this month the amount languishes close to 400K. ETH trading on decentralized exchanges reached its peak of 2.3 million ETH in May 2018. However, the trend ever since has been on a downward spiral.
No Appetite for DEXs?
A number of prominent crypto exchanges have shown interest in pursuing the DEX model in recent times. In March 2018, Binance announced that they would launch a public blockchain for their upcoming decentralized exchange. Later, in October 2018, the exchange’s CEO, CZ announced that the upcoming Binance DEX would use their native token BNB as gas.
Drifting further east, reports emerged on October 19, 2018, about the launch of a decentralized exchange by South Korean crypto exchange behemoth Bithumb.
However, it’s worth giving a thought whether the demand for such an exchange model actually exists. Even after taking into account their minuscule trading fees, DEXs the world over haven’t performed particularly well.
Cumbersome barriers such as slow user experience infrastructure, mandatory deposit/withdrawal and the use of gas continue to stifle the adoption of DEXs en masse.