Decentralized exchange trading lacks infrastructure despite rapid growth

decentralized exchange trading

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TL;DR Breakdown: 

  • Two problems may pose threat to the use of decentralized exchanges. 
  • Decentralized exchanges would keep growing in the near future. 

According to data obtained from Coinmarketcap, decentralized exchange trading has generated more than 15 percent of the entire cryptocurrency trading volume. During the most part of 2020, Uniswap surpassed Coinbase’s trading volume, achieving this feat with just 20 workers. 

The growth of decentralized exchanges has increased rapidly in just a few months, since November last year. As of this writing, Venus exchange is making the news today, leading the 24-hour market trading volume alongside Binance

Problems with decentralized exchange trading 

There are several reasons why many expert traders value decentralized exchanges. From secure P2P (peer-to-peer) to trading between wallets, traders are very much pleased with trading using these DEX platforms. 

However, there are two significant problems users face when trading on decentralized exchanges. Firstly, the KYC is a real issue for traders. Individuals cannot trade on decentralized exchanges if counterparty KYC is not sorted out. Secondly, DEX trading is more expensive than regular trading and relatively slow due to its support technology. 

Therefore, before decentralized exchange trading would be widely accepted by a large number of traders, it must be fast, offer cheaper fees for trade, and provide state-of-the-art KYC protocols. 

Decentralized exchange trading is not a viable option for traders because of the absence of KYC during onboarding. Still, traders remain active on Uniswap. With just 300,000 users compared to Coinbase with over 35 million users, Uniswap users take part in trading more, which is shocking judging by the huge gap between both platforms in terms of users. 

The implication of these statistics is that many traders prefer decentralized exchange trading to a centralized exchange. However, no real market provides real coverage data, and no trading market offers efficient, secure, and fast decentralized exchange trading. 

With the large number of people making transactions on decentralized exchanges, large-scale trading is inevitable. Therefore, users are exposed to many risks due to inadequate regulations. In the meantime, decentralized exchanges such as Uniswap seem to only have the option of continuous growth. 

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UC Hope

UC Hope is a passionate fan of crypto who could weave the latest event into sparks of inspiration and information. He leaves no stone unturned to get to the core of a story. Aside from writing, he spends his hours poring over algorithms and protocols, preparing for a future career as a computer programmer. He joins the team to contribute his insights with precision.

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