Chainalysis notes consolidation of the crypto exchange market

Over the year, trading volume on large decentralised exchanges (DEX) rose by 550%, while in the segment of smaller platforms the figure fell, according to Chainalysis analysts in the report.

Even larger growth in trading volumes over the year was recorded in the sector of large derivatives exchanges — 686%.

Analysts classified platforms with a monthly turnover of up to $10 million as small exchanges. These market participants lost volumes across all segments except P2P platforms.

The number of active cryptocurrency exchanges peaked at 845 in August 2020. Over the year, their number declined to 672 venues.

Experts say the trends point to consolidation of an increasingly competitive exchange market. Innovation and scale are the keys to success, they emphasised.

Since January 2019 the number of DEXs and OTC-brokers has grown markedly, as has the number of derivatives exchanges, while centralised platforms have declined.

The average transaction value on a DEX stands at more than $26,000, versus about $12,400 on centralised exchanges. Experts say this is linked to greater popularity of DeFi in advanced countries with large crypto markets.

David Gogel, head of growth at the DEX dYdX, confirmed the trend to Chainalysis’ analysts. He said most DeFi users are institutional investors or traders seeking new sources of profit.

The same trend extends to derivatives exchanges, where the average transaction value is even higher, experts suggested.

They noted that aggregate trading volumes on DEX are now close to parity with those of centralised platforms, and in some months even surpass them. They say the success of non-custodial platforms stems from giving users greater control over their assets and access to new forms of deals.

published the final version of its guidelines for the crypto industry. Experts pointed to the risks that the provisions pose for DeFi projects.