Decentralization is an integral principle when it comes to cryptocurrency, so it’s no surprise that decentralized exchange (DEX) protocols continue to become more popular. More investors are hoping to create passive income with their cryptocurrency holdings, and many DEXs make this process quite simple. Of course, there are still concerns about DEX protocols.

The DeFi sector has grown significantly since 2020, and the decentralized exchange is one of the main growth drivers. There are more incentives than ever for cryptocurrency investors to take advantage of their crypto assets, whether they hope to lend, borrow, stake, or farm those cryptocurrencies.

Decentralized exchanges have been one of the main reasons that decentralized finance has been outperforming traditional finance significantly. Here, we examine the top 3 trending decentralized exchange topics.

Decentralized exchanges vs centralized exchanges

Many centralized exchanges (CEXs) were critical for the growth of the cryptocurrency markets, and have become a critical part of the sector in general. Binance and Coinbase handle billions of dollars weekly and have millions of investors and traders that use their exchanges worldwide.

However, it appears as though the tide is shifting quite quickly, and by tide…we mean actual trading volume.

Recently, a decentralized exchange has overtaken Coinbase in terms of daily volume. Specifically, Uniswap overtook Coinbase in daily volume, partially due to broader market sentiment reflecting the recent trend of investors moving away from altcoins toward large-cap tokens and stablecoins. This milestone also represents a general shift towards DEX protocols and the growth of the DeFi sector in general.

If you’re still unclear about what a decentralized exchange is, we recommend you check out this article introducing the concept of DEXs before you move on!

The China crypto ban

There are new DeFi platforms, products, and services that emphasize decentralization. However, regulation does not move at the speed of innovation. Since these DeFi protocols are decentralized, what would regulation even look like?

cityscape downtownEven if DeFi smart contracts cannot be “shut down,” governments could still declare DeFi transactions illegal. Regardless, it appears as though DEX protocols are only thriving in the wake of China’s announcement.

What’s next for DEX

Even as technology advances, the rise of digital fraud is proof that cybercriminals will always find some way to infiltrate systems. There have been major cryptocurrency hacks despite blockchain technology, and criminals have stolen billions of dollars in cryptocurrency from centralized exchanges.

Blockchain may not be able to completely prevent financial services scandals, but it can certainly improve accessibility and transparency within the financial sector. While it might not be able to prevent any and all schemes, blockchain can reduce digital fraud significantly. 

It can also offer data security solutions in a world where cybersecurity is more important and relevant than ever before. Still, we have yet to see just how critical the technology will be to shaping the future of the financial services industry.

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Michael Hearne

Michael Hearne is the CEO of Decentral Publishing and the host of the Uncensored Crypto docuseries.