CoinGecko has recently published its 2023 report on the cryptocurrency markets, revealing that centralized exchanges continue to dominate despite Binance’s issues. Binance remains the largest crypto exchange globally, but due to regulatory problems, its market share has slightly decreased.
According to the CoinGecko report, 91.4% of spot trading volumes in cryptocurrencies took place on centralized exchanges. When considering derivatives like futures and options, this percentage rises to 98%. Derivative exchanges primarily occur on centralized platforms because they offer faster transactions, making them more suitable for short-term traders and speculators. This explains why centralized exchanges still maintain absolute dominance over decentralized exchanges in terms of trading volumes.
The report also highlights the months with the highest trading volumes in 2023: March and December. In March, there were several bank failures in the US, leading to a temporary collapse in the crypto markets. In December, there was a small altcoin bull run as investors awaited the approval of Bitcoin spot ETFs.
Despite Binance’s issues, overall trading volumes on crypto exchanges increased until March and remained low from April to September before starting to grow again in October. Binance’s problems mainly resulted in a decrease in its market share compared to other exchanges. However, it did not significantly impact the overall dominance of centralized exchanges.
In terms of decentralized exchanges (DEX), Uniswap still holds the majority market share, although its dominance has decreased. Pancake Swap benefited the most from this decline. Orca experienced a boom in December with 11% of all DEX trading volumes. Curve decreased while THORswap saw significant growth.
However, monthly volumes on DEX remain relatively low compared to centralized exchanges. Ethereum also lost dominance due to high fees, with Arbitrum becoming the second-largest chain for DEX trading volumes in December. Ethereum’s dominance dropped from 79% to 41%, while BSC and Solana experienced strong growth.
Overall, 2023 was a transitional year for DEX, particularly for Arbitrum and Solana, but it was not a standout year for decentralized exchanges in general.
Hot Take: Centralized Exchanges Maintain Dominance Despite Binance’s Issues
CoinGecko’s 2023 report on the cryptocurrency markets reveals that centralized exchanges continue to hold a significant share of trading volumes, despite the challenges faced by Binance. Although Binance remains the largest exchange globally, its market share has slightly decreased due to regulatory problems. However, this has not affected the overall dominance of centralized exchanges.
Decentralized exchanges (DEX) still struggle to compete with centralized platforms, particularly in derivatives trading. The report highlights the months with the highest trading volumes in 2023: March and December. While Binance’s issues did impact its market share, it did not significantly affect trading volumes or the dominance of centralized exchanges.
Uniswap remains the dominant DEX, although its market share has decreased. Pancake Swap benefited from this decline, while Orca experienced a boom in December. Ethereum lost dominance due to high fees, with Arbitrum emerging as the second-largest chain for DEX trading volumes.
Overall, 2023 was a year of transition for DEX but did not mark a significant breakthrough for decentralized exchanges.
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