ExchangeOpinion
|10 min ReadCan DEX replace CEX? 2025 becomes a real contest
Maya Chen
Senior Analyst
Published
Jan 16, 2026
From experiments to trust shocks to real competition
Decentralized finance has evolved with every cycle. Centralized exchanges still lead on volume, but decentralized exchanges keep taking share. The gap is now the narrowest ever. The reason for the historic gap was simple. Decentralization came with hard infrastructure limits. For most of the past decade, blockchains lagged CEX on speed, liquidity, and user experience.
The arc is clear. In 2017 to 2018, early DEXs like EtherDelta ran on Ethereum Layer 1. Settlements took minutes. Interfaces were basic. Liquidity was thin. Binance expanded like a Web2 app. Fast. Liquid. Friendly. Retail and institutions flocked there. DEX share was near 0 percent. CEX share was near 100 percent. Decentralization was feasible, but performance and ease were the blockers.
In 2020, DeFi Summer delivered a design breakthrough. Uniswap’s AMM removed the order book and let anyone provide liquidity without permission. It was the first major DEX architecture innovation. It worked best for long-tail tokens and did not match deep books in majors. Gas spiked from under 20 gwei to over 400 gwei. Latency rose. Pros stuck with Bybit and Binance. DEX share sat near 0.33 percent while CEX held 99.67 percent. Uniswap v3 arrived in 2021 with concentrated liquidity. LPs set custom ranges. Impermanent loss still hurt. But the leap was big. DEXs moved from experiments to viable venues for specific segments and traders.
In November 2022, FTX collapsed. Trust in custodial platforms broke. “Not your keys, not your coins” took over crypto X. Uniswap volumes topped $5 billion. dYdX volumes jumped 400 percent. Users rushed on chain. Then many drifted back as fear faded. Wallet UX was clunky, cross-chain liquidity was fragmented, and fiat ramps were weak. DEX share hovered near 5 percent while CEX stayed near 95 percent. The DeFi stack kept improving with cross-chain routing on Uniswap and better wallets like Rabby and Phantom. Still, DEX latency lagged. AMM design constraints clashed with ultra-low-latency order book trading.
In 2025, the environment changed. Infrastructure finally looked ready for a real fight. High-performance chains, on-chain central limit order books, direct fiat integrations, and near-CEX latency entered production. Perp DEXs such as Hyperliquid, Paradex, and Lighter began to offer a CEX-like trading feel on chain. Liquidity aggregation, faster confirmations, and unified margin let traders run spot and derivatives strategies without the old frictions.
Figure 1. DEX and CEX market share trend.
2025 by the numbers: CEX still leads, DEX catches fast
The data is direct. CEX still dominates global liquidity, but DEX keeps closing the gap each quarter across spot and derivatives. DEX spot share rose from 10.5 percent in Q4 2024 to 19 percent by the end of Q3 2025. In futures, DEX share reached about 13 percent by late Q3 2025, up from 4.9 percent in Q4 2024. DEX spot volumes hit 1 trillion in Q2 and above the prior $1.2 trillion peak in Q1.
Perp DEX volumes expanded even faster in 2025. Cumulative on-chain perps reached 5.4 trillion in Q3 2025, up 25 percent quarter on quarter. The direction is clear and accelerating. DEX spot volume rose 43.6 percent quarter on quarter and 33 percent year on year. The DEX share of total futures rose from 3.45 percent to 16.7 percent over the last 12 months. If the trend holds, 2025 will mark an inflection for DEX positioning.
Figure 2. DEX share in spot and perpetuals.
Figure 3. Quarterly spot DEX volume.
Figure 4. Quarterly perp DEX volume.
Figure 5. CEX spot monthly volume.
Adoption is uneven by region and cohort. Asia-Pacific is the fastest-growing region with on-chain activity up 69 percent year over year. Latin America and Sub-Saharan Africa follow. North America and Europe still lead in absolute transaction size but grow slower, roughly 42 to 49 percent. Institutions now route across CEX and DEX to optimize execution and hedge. Most new tokens debut on DEX for permissionless price discovery, then seek CEX listings for wider distribution. DeFi TVL reached $157 billion in Q3 2025, an all-time high. Over half of TVL is tied to DEX protocols and liquidity pools. Ethereum holds about 63 percent of TVL.
User bases differ. CEX still leads with more than 300 million registered users worldwide and about 290 million on Binance alone. DEX monthly active users are around 10 to 15 million. The DEX cohort is smaller but more DeFi-native and experienced. The market is moving, step by step, from centralized rails to on-chain execution.
The CLOB era: breaking AMM walls and matching CEX speed
AMMs powered the first DeFi wave by enabling permissionless trading, but they carry limits in efficiency, price discovery, and capital use. The new era is the on-chain central limit order book. It is a structural jump. Hyperliquid shows what a CEX-grade engine with on-chain transparency can do. It reintroduces the order book while keeping self-custody and auditability. Latency is low. Average confirmation is about 0.07 seconds with HyperBFT. That rivals major CEX venues and beats AMM DEX timing in the 2 to 30 second range.
Depth is real. Hyperliquid can process up to 200,000 orders per second. Open interest sits near 655.5 billion of volume in Q2 2025. That is tremendous scale, on chain.
Figure 6. CEX vs AMM DEX vs order book DEX, feature comparison.
This is the convergence path. CLOB DEXs blend CEX-level performance and depth with DEX transparency, self-custody, and on-chain execution. The overlap keeps growing.
Figure 7. Convergence of the CEX and DEX domains.
Why traders are moving on chain: UX, fees, and fairness
Traders may love decentralization on principle, but real migration happens when safety, cost, or convenience gets better. CEX won for years by offering a smoother experience and deeper liquidity. That edge is fading. DEXs bring two native advantages. Transparency. Self-custody. On-chain settlement is traceable and auditable. Protocols often publish proof of reserves. Users can verify flows. Self-custody keeps assets in the user’s control and avoids custodial hacks. By mid-2025, CEX hacks had stolen more than $2.17 billion.
The old DEX weakness was execution. That is changing fast. dYdX pushed the frontier. Hyperliquid accelerated it. In 2025, Lighter, Paradex, and Bullet showed that order-book DEXs can meet or beat CEX latency in some cases while keeping decentralization. Trading dashboards from Hyperliquid, Paradex, and Lighter feel competitive with Binance on design and responsiveness. Liquidity is migrating from AMMs to on-chain order books, producing deeper books, tighter spreads, and lower slippage. Wallet onboarding has improved with one-click flows, fiat on-ramps, and guided tutorials. Opening a DEX account can be faster than a CEX KYC in some cases.
The business model is evolving too. CEXs rely on maker-taker fees, rebates, and affiliate revenue. New DEXs go zero-fee on the surface and monetize order flow like Robinhood, but on chain and more transparent. Paradex and Lighter use retail price improvement and payment for order flow to enhance execution quality and fund the protocol. That undercuts CEX fee economics, lowers entry costs for users who are sensitive to small fee differences, and shifts the competition toward depth, execution, and services. Major CEXs are hedging. Binance leadership has talked up non-custodial and on-chain initiatives, with CZ advising a BNB Chain-based DEX called Aster. Bybit and others are integrating on-chain features or investing in DEX infrastructure. The message is clear. The next leg of exchange growth runs on chain, with interoperability and community alignment. Very big. Very strong.
Stress tests, regulation, and the road ahead
October 9 to 10 brought the largest liquidation wave on record after a 100 percent tariff shock on China. Over 4.5 billion. Hyperliquid stayed transparent and online. The contrast was loud. In a storm, deterministic settlement and open books build trust. Everybody knows it.
The likely near-term shape is a dual-venue world. CEX stays essential for fiat rails, compliance, insurance, and onboarding. DEX shines where decentralization is the point. Catalysts can pull more flow on chain. On-chain CLOBs must extend deep liquidity to less active pairs to attract day-trading flow. Options need to scale on chain, not just perps. Fiat must integrate cleanly. Regulators are starting to treat non-custodial platforms as legitimate market venues. Singapore and Japan are testing compliant DeFi sandboxes. Broader clarity under SEC and MiCA is expected. Privacy will matter. On-chain dark pools can protect block trades from predation, reduce manipulation risk, and bring in institutions. Big fintechs like PayPal and Stripe can blend bank-grade support with seamless fiat channels, chipping away at CEX’s ramp advantage.
The trend lines point to bold outcomes. Based on the current trajectory, DEX spot share could pass 50 percent by mid-2027. DEX perp share could pass 50 percent by early 2027. Even under conservative growth, DEX can cross 50 percent within two years. Governments are moving into DeFi frameworks. Singapore and Japan are running DeFi sandboxes. The SEC and MiCA are expected to roll out related structures. That helps legitimize non-custodial venues and lowers legal anxiety for users and institutions.
Black-swan stress in October underscored a core point. In transparent liquidations, DEX architecture holds up better when it matters most. When CEX systems falter, Hyperliquid and other on-chain venues can keep running. That is not just ideology. That is operations. Next up are on-chain dark pools and more composable liquidity layers. CLOB DEXs already deliver near-CEX execution. Add privacy and more product breadth, and the value proposition becomes hard for CEX to match.
The competitive path is clear. 2025 is an inflection. DEX has moved from experimental alternative to credible rival, with a real shot at majority share in the next two to three years. Tremendous shift. Incredible pace.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.