Chainfeeds Briefing:
Grayscale Research predicts that CEX will continue to dominate trading for high-market-cap assets like Bitcoin, while DEX will become the preferred platform for long-tail asset trading.
Article Source:
https://www.jinse.cn/blockchain/3716302.html
Article Author:
Grayscale
Perspective:
Grayscale: Public chains provide digital business solutions without centralized intermediaries. However, to attract users, decentralized technology must offer at least equally appealing features as centralized solutions. If decentralized applications are inferior to centralized solutions in speed, cost, and historical data, blockchain activity will likely remain a small part of the online business landscape. Fortunately, after years of exploration, we have witnessed decentralized applications competing directly with traditional institutions in the core area of cryptocurrency token trading. Grayscale Research estimates that DEX currently accounts for 7.6% of global cryptocurrency trading volume (only 3% in 2023), with its trading volume share relative to CEX significantly increasing. Today, DEX is on par with CEX in pricing, often has higher transparency, and frequently serves as the primary trading venue for newly issued on-chain assets. This year is likely to be an industry turning point, with technological advancements and regulatory clarity driving user adoption of DEX and other DeFi applications. This article will comprehensively overview the DEX industry, including industry structure, competitive landscape, and development prospects. Grayscale Research believes that market leadership will ultimately concentrate on a few top platforms - possibly only one or two exchanges in each segment (CEX vs DEX, spot vs perpetual contracts) - that combine deep liquidity, capital-efficient infrastructure, and attractive token or equity economic models. In traditional finance (TradFi), trades are executed through exchanges or over-the-counter (OTC) markets after price consensus is reached between trading parties. These trades are matched through central limit order books (CLOB) or broker networks. After execution, clearing houses like the Depository Trust Company (DTC) confirm transaction details, net participant risk exposure, and complete settlement the next day (electronic transfer of funds and securities ownership). Stock securities will transition from T+2 to T+1 settlement in May 2024. Cryptocurrency trading adopts a completely different market structure, which can be divided into three main categories: trading venues, exchange architectures, and trading products. Cryptocurrency trading venues are primarily divided into two types: Centralized Exchanges (CEX): Traditional businesses using off-chain custody and trade matching, providing near-instant settlement through internal ledgers. However, users still experience settlement delays when transferring assets to traditional bank accounts. Decentralized Exchanges (DEX): Smart contract applications directly deployed on blockchains like Ethereum, supporting direct trading from self-custodial wallets. When trading on DEX, execution and settlement are completed within a single block confirmation cycle, typically taking only seconds. The development of decentralized exchanges shows clear stage-by-stage breakthroughs, with each generation overcoming the limitations of the previous one. Early attempts (2017-2018) - such as EtherDelta's order book model, 0x protocol's off-chain relay solutions, and Bancor's pioneering AMM liquidity pools - validated the feasibility of decentralized trading but faced significant user experience and liquidity challenges. Uniswap's launch in 2018 was a turning point, with its simplified AMM model and intuitive interface significantly improving accessibility and paving the way for explosive growth in trading volume and total locked value during the 2020 "DeFi Summer". Further optimizations from 2021 to 2023 - especially Uniswap v3's concentrated liquidity design and innovations by Perpetual Protocol and GMX in perpetual contracts - significantly enhanced capital efficiency and enabled more refined on-chain derivatives trading. The recent stage (2023-2025) has seen the emergence of on-chain CLOB solutions like dYdX Layer1 based on Cosmos and Hyperliquid's ultra-high-speed custom blockchain, combining the speed and precision of centralized exchanges with DeFi's transparent decentralized characteristics. Currently, the daily average trading volume (ADV) for cryptocurrency DEX spot and perpetual contracts is approaching $10 billion, compared to around $150 billion for NYSE Group platforms. DEX perpetual contract trading volume growth is primarily driven by Hyperliquid, which accounts for approximately 80% of total perpetual contract daily average trading volume.
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