Trading volume on the Coinbase exchange has surpassed that of popular decentralized exchange Uniswap this year, according to a report by crypto data firm Kaiko.
As of Friday, Coinbase’s trading volume had surpassed $185 billion, almost double Uniswap’s $93 billion, Kaiko said. At some point in 2022, trading volumes across exchanges will be nearly flat.
Following the collapse of the FTX exchange and other centralized entities in the crypto ecosystem last year, market watchers expect to see more traders switch to decentralized exchanges (DEXs), and at some point in 2022, this shift will seems to be happening. But users face many challenges when using DEX.
Data from analytics platform DefiLlama programme Trading volume on decentralized platforms rose to $113 billion in November, the highest monthly level since May. But at present, judging from the daily trading volume, it seems impossible to exceed 100 million US dollars this month.
Conor Ryder, a research analyst at Kaiko, commented that the call to switch to DEXs seems “a bit premature,” as centralized exchanges (CEXs) still play an important role in attracting casual investors to the market.
In a direct message on Twitter, Ryder said:
“Maybe the average investor is still annoyed by the poorer user experience on some of these DEXs compared to the simpler experience on CEX. I think CEX will always be a big part of the exchange space, whether we like it or not.”
Lucas Outumuro, director of research at blockchain analytics firm IntoTheBlock, said demand for non-custodial exchanges and decentralized finance has surged after the FTX crisis is now “down.” Outumuro highlighted that the number of new Ethereum addresses per day and the volume of transactions on DeFi exchanges are still small.
According to data from IntoTheBlock, the number of new Ethereum addresses reached around 228,000 a day on November 24, the highest level since May 2021, but has dropped below 90,000 a day.
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Outumuro commented in a Telegram message:
“Joining Coinbase is similar to what people are used to with other financial or technology platforms, whereas joining Uniswap is a completely different process. This makes adoption take longer as new users can be intimidated.”
Slower transaction speeds, asset pools and order retrieval functions could limit institutional participation, JPMorgan strategists wrote in a November note. Analysts pointed to the lack of limit order/stop loss functionality on decentralized exchanges, reliance on price oracles to obtain data from centralized exchanges, fragility, excessive collateral requirements, and risky systems for large-scale automatic liquidation hindered widespread adoption .
“While DEXs have increased their overall market share of crypto trading activity in recent weeks, this more likely reflects a drop in crypto prices and the occurrence of ADL/lower leverage. Following the FTX crash,” the authors wrote road.
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According to Coindesk