[CMC Playbook] 🔎 Crypto exchanges are marketplaces that allow buyers and sellers to trade cryptocurrencies and other digital assets. Uniswap looks at some insights of DEXs & CEXs 👇
CEXs — which have been around much longer — are understandably further along. In May 2021, CEX spot volume totaled $2.3T, which is nearly equivalent to all-time DEX volume. In 2022, CEXs averaged a monthly volume of $695B, nearly 7x that of monthly DEX volume.Despite the multi-year head start, there is strong evidence that DEXs are eating into CEX market share. The DEX-to-CEX spot volume ratio has been steadily increasing, peaking above 25% in February 2022.
With the clear user safety advantages baked into DEX technology, we anticipate that users will prefer DEXs to CEXs due to increased transparency, self-custodied assets, and permissionless access. However, DEXs and CEXs compete in the same customer market. To flip CEX market dominance, DEXs must:• Compete on cost and fees• Fiat on-ramps allow for retail users to purchase from their bank accounts or credit & debit cardsThe first problem is an easy fix.
The second challenge is a bit more complex. Seed phrase and private key management is essential to navigating the crypto ecosystem but users expect to be able to recover their accounts if they forget their passwords.such as iCloud backups, multi-party computation, and social recovery have made significant UX improvements.
In our experience addressing common user frustration navigating DEXs, we’ve made a number of improvements to onboard directly into DeFi. For example, the allows users to purchase and swap cryptocurrencies within minutes using a credit card, debit card, or bank transfer.Once onboarding is complete, users will want to swap cryptocurrencies and manage their portfolios. CEXs provide a more intuitive interface for this. Similar to financial apps like Venmo and Robinhood, CEXs have intuitive trade features where connecting to DEXs often requires navigating to the app, approving transactions, and then trading.
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