DEX is not dead; CEX is just riding the wind.

Author: Prathik Desai, Source: Token Dispatch

Preface

For centralized exchanges (CEX) and decentralized exchanges (DEX), the past year has been full of changes. In the last 12 to 18 months, participants in the cryptocurrency space have witnessed a shift in trading momentum and liquidity from centralized exchanges (CEX) that rely on trust and compliance to decentralized exchanges (DEX) that promise users transparency, composability, and self-custody.

Despite media reports claiming a strong return of centralized trading, a deeper analysis of the data reveals that the reality is much more complex.

In this quantitative analysis, I will delve into the data of DEX and CEX to better understand the evolution of spot and leveraged liquidity in cryptocurrency trading.

The Battle of CEX and DEX

In the long run, 2025 seems to be a year of strong recovery for centralized exchanges (CEX) after nearly two years of declining confidence and shrinking liquidity. From January 2021 to May 2022, the average monthly trading volume of centralized exchanges far exceeded $1.5 trillion. However, since June 2022, until November 2023, the monthly trading volume has only once broken the $1 trillion mark.

In the past two years, the trading volume of CEX has surged. Thanks to favorable factors such as ETFs and the macro economy, the trading volume has reached new highs repeatedly. By December 2024, this figure has climbed to $2.94 trillion.

The fourth quarter of 2024 is a turning point for trading volume growth. The spot trading volume of CEX skyrocketed from $1.14 trillion in October to $2.94 trillion in December, resulting in an average monthly trading volume of over $2.25 trillion for the quarter.

This growth aligns with the warming of market risk appetite following the re-election of U.S. President Donald Trump and the progress of negotiations supporting cryptocurrency regulation.

The first quarter of 2025 continued this growth trend, with an average monthly trading volume approaching $1.8 trillion, but it dropped by about 30% in the second quarter to $1.3 trillion. However, in the third quarter of 2025, trading volumes rebounded sharply, with an average monthly trading volume exceeding $1.8 trillion.

While centralized exchanges (CEX) are experiencing a strong recovery, decentralized exchanges (DEX) have not been stagnant. In fact, their growth rate continues to outpace that of centralized exchanges.

In January 2024, the spot trading volume of DEX was approximately $133 billion. Just 18 months later, this figure quadrupled to over $540 billion.

In the first quarter of 2025, the average monthly trading volume of DEX was $395 billion, and in the second quarter it was $332 billion. By the third quarter of 2025, the average monthly trading volume had increased by 50%, reaching $480 billion. The trading volume in October has exceeded $540 billion.

As of this year, the spot trading volume of the decentralized exchange (DEX) has accounted for nearly 20% of all spot trading volume, up from just over 10% in 2024. Although centralized exchanges (CEX) still dominate the market due to the advantages of fiat recharge channels, DEX has become the preferred choice for users seeking speed, composability, anonymity, and self-custody.

Protocols such as Uniswap v4, Hyperliquid L1, and Raydium offer a better user experience, lower Gas fees, and smaller spreads, narrowing the experiential gap between the two ecosystems.

Drivers of Derivatives

If you ask me what the most important factor driving DEX activity is, I would choose perpetual contracts without hesitation. Before 2024, on-chain perpetual contracts are still a niche product, with monthly trading volumes only in the tens of billions of dollars. This is mainly concentrated on protocols like dYdX, GMX, and a few other Arbitrum-based DEXs. However, by the end of 2025, the scale of these platforms begins to rival that of the entire decentralized exchange (DEX) spot market.

In January 2024, the monthly trading volume of perpetual contract DEX was $127 billion. By December 2024, this number nearly tripled to $345 billion.

However, 2025 changed this trend. The average monthly trading volume of perpetual contracts grew from 332 billion dollars in the first quarter to 688 billion dollars in the third quarter, more than doubling. In October alone, its trading volume surpassed 1.13 trillion dollars, marking the first month that on-chain derivatives trading volume exceeded one trillion dollars, which is more than twice the size of the DEX spot market.

These data not only indicate that more traders are entering the on-chain field, but also show that the trading activity of each trader has increased. On-chain DEXs that offer perpetual contracts have now replicated some functions of centralized exchanges (CEX), such as isolated margin, deep order books, and cross-chain collateral. Additionally, they provide high composability that CEXs cannot offer. These advantages are sufficient to retain numerous high-value traders in on-chain trading.

This trend is reflected in the stable rise in the trading ratio between decentralized exchanges (DEX) and centralized exchanges (CEX) in derivatives trading.

In 2024, the global futures trading volume handled by decentralized exchanges was less than 5%. By mid-2025, this figure doubled to 10%, and by October, it reached 14.3%, setting a record high for on-chain derivatives as a proportion of centralized exchanges.

Compared to the scale of Binance, this number is still small, but it indicates the future direction of development. Although the trading volume of centralized exchanges' derivatives has basically remained within a range this year, the trading volume of decentralized exchanges has been growing each quarter since the middle of 2023.

Transaction volume can certainly reflect part of the situation, but the open interest (OI) provides more detailed information. As of January 1, 2024, the open interest on on-chain exchanges only accounts for 1.5% of global derivatives trading volume. By December 31, 2024, this proportion doubled to 3.7%, and by June 30, 2025, it reached 5.9%. By September 30, 2025, this proportion will reach 9.8%. In less than two years, growth exceeds 6.5 times.

These changes collectively indicate that although centralized exchanges (CEX) remain liquidity hubs, decentralized exchanges (DEX) will soon become new risk centers. Traders' choices of where to trade depend not only on trust but also on the additional features of the platform.

The growth of DEX in the spot, derivatives, and perpetual contract sectors indicates that they offer functionalities that CEX cannot replicate, at least not for now. The absolute number of on-chain traders may still be small, but their intentions and the functionalities they demand send a clear message to cryptocurrency developers: which aspects should be prioritized when developing cryptocurrency exchanges.