DEX Trends in 2022: Greater Market Share, New Products, Familiar Challenges

cryptonews.com:

Debate continues to rage over just how decentralized crypto really is. While cryptoassets such as Bitcoin (BTC) operate with no obvious center, critics note that the overall market is far too reliant on a handful of centralized exchanges -- Binance, Coinbase, and Kraken (to name a few) -- for its liquidity and investment.

Well, crypto has in fact already provided a solution to this problem, in the form of decentralized exchanges (DEXes). These are effectively protocols for creating pools of assets that can be traded, and while they have remained relatively marginal in previous years, 2021 saw them gaining in importance.

According to industry figures speaking to Cryptonews.com, DEXes will continue to grow in 2022, fueled by the growth of competing blockchains and faster layer-two scaling solutions. And even if their centralized counterparts may remain dominant, they will continue to gain more market share, with rising demand for self-custody fueling their expansion.

“Trading volume on DEXes has been on the rise since DeFi summer in 2020,” said Timo Lehes, Co-founder of Swarm Markets, a DeFi protocol.

He notes that trading volume on DEXes reached roughly USD 1.1trn in 2021. Uniswap (v3), for instance, currently posts 24-hour volumes of around USD 2.6bn, while Pancakeswap registers nearly USD 800m, per CoinGecko data.

And for Lehes, such volumes are “only set to increase as people enjoy the benefits of DeFi innovation and search for yield.”

He’s not alone in predicting continued growth, with JHL -- a pseudonymous contributor to Solana (SOL)-based DEX Serum -- expecting DEXes to continue capturing market share from centralized exchanges.

“One of the key drivers is the launch of more DeFi derivatives protocols on fast, cheap