DEX Activity Surges as Retail Investors Seek Early Access to Tokens

Decentralized exchanges are undervalued and gaining traction, 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 Aug. 13.

He added that they’re becoming a “dumping ground for VCs,” and retail will learn sooner or later stop participating in this dynamic.

DEXs give retail traders a better chance to buy new tokens as they’re listed early, he said.

DEXs are being slept on.

CEXs are listing coins too late and they're becoming dumping ground for VCs. Retail will learn sooner or later and stop participating in this dynamic.

DEXs on the other hand list coins early – this gives retail a chance to buy.

🚀 Unsurprisingly, DEX… pic.twitter.com/Vbd472m2x6

— Kunal Goel (@kunalgoel) August 13, 2024

DEXs Could Improve

The researcher said there were several advantages that DEXs have over CEXs. These include an improved on-chain user experience in terms of speed and cost, as well as better wallet integration and reliability.

A DEX doesn’t stop during times of market turbulence whereas centralized exchanges, Coinbase being the prime example, can suffer outages during peak volume periods. However, DEX token values have not reflected these advantages, and many of them have slumped to bear market levels.

Goel said that this could change for several reasons. Firstly, DEXs leak Miner Extractable Value (MEV), so retaining this would give them additional revenue.

New tokenomic models to capture and distribute cash flows are being developed, and the potential integration of features like 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 maybe crypto’s most successful product. Currently, they service circular crypto speculation, but in the future, all assets will be tokenized and on DEXs.”

DEX Volumes Up in 2024

According to DeFiLama, daily DEX volume is around $5.25 billion. It has more than doubled since 2023 when average daily volumes were closer to $2 billion. In terms of market share, DEXs currently have around 21% of the crypto exchange market compared to their centralized counterparts.

Uniswap is the largest DEX, with a daily volume of $1.48 billion 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 it also lists Uniswap as the market leader.

It reports a DEX token market capitalization of $14 billion, which represents just 0.6% of the total crypto market.