Why are DEXs gaining more popularity?

Highlights

• According to research from a Citi report, DEXs have grown faster than CEXs over the past two years.
• Citi highlights that the gap will likely widen, considering users prefer to avoid their more onerous KYC procedures.

The year 2022 has been a tutumulous year for cryptocurrencies. Not only has the market witnessed bearishness, but even there has been an increase in the number of tokens collapsing. Amid this, the decentralised exchanges, which are trustless in nature, have climbed up the charts compared to their counterparts.

According to a research firm Chainalysis, the decentralised exchanges received about US$224 billion in value from April 2021 to April 2022. Compared to the DEXs, the centralised exchanges only contributed US$175 billion in the same period.

According to the Chainalysis report, the top five decentralised services, such as Uniswap, ShushiSwap etc., account for 85% of all aggregated DEX transaction volume

Why are DEXs getting popular

But with the talks of crypto regulations taking rounds, we may see an increase in more number of people moving towards DEXs.

According to research from a Citi report, DEXs have grown faster than CEXs over the past two years. The gap will likely widen, considering users prefer to avoid their more onerous KYC procedures. Citi feels one reason for the users to switch to DEXs may be the custody of funds, as users often find CEXs risky in storing assets with CEXs.

Conclusion

While the DEXs growth indicates that there is room for such peer-to-peer marketplaces, allowing users to make transactions directly without third-party invovlement. While they have grown late, they can be equally risky as CEXs. Therefore, as an investor, it would be advisabel to do proper market research before the crypto domain and understand the nuances of the market and its working before making big investment decisions.

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