DEX In 2021: Reviewing A Rollercoaster Year For Decentralized Exchanges

Decentralized exchanges (DEX) have had an interesting year in 2021. As the year is on its last lap, it has never made more sense to look at how these exchanges have done. The growth in 2021 alone has been tremendous and has propelled a lot of these decentralized exchanges into the limelight.

Despite the growth that they have experienced, it has not always been rosy for decentralized exchanges throughout the year. Like the rest of the crypto market, they have also experienced their own share of ups and downs. The volatility that plagues the crypto space has spilled onto decentralized exchanges and has no doubt been a defining factor in their growth.

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2021 In Review

Trading on decentralized exchanges surged in 2021 alone. Compared to 2020, aggregated trading on decentralized exchanges was much higher in 2021. It follows the growth of decentralized finance (DeFi) that saw major accelerated growth in the same year. As more users flocked to take advantage of DeFi, decentralized exchanges were positioned to gain the most from this movie.

The growth has however not been all smooth through this time. While much growth was recorded for the year, it was also a highly volatile time for the exchanges. Trading volumes have fluctuated greatly from low to high in various months.

DEXes record new trade volume highs in 2021 | Source: Arcane Research

One example of this has been the growth recorded in the first five months of the year. Monthly trading volumes had grown from $62 billion in January to $163 billion in May. This growth also translated to centralized exchanges which also recorded record-breaking trading volumes. But then going forward, trading volumes had fallen, showing mostly volatile growth.

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Where Are Decentralized Exchanges Headed?

The year is almost at its end and aggregate numbers are coming in for the year. Decentralized exchanges have continued to do well after plummeting from May highs. By July, monthly trading volumes had plummeted from $163 billion to $56 billion. Trading volumes have since climbed back up to $107 billion in November. For December, trading volumes have been on the rise once again, suggesting that these exchanges may record higher volumes for the month.

Total DeFi Market Cap chart from TradingView.com

Total DeFi market cap at $149 billion | Source: Crypto Total DeFi Market Cap from TradingView.com

Both centralized and decentralized exchanges have also recorded similar trade movements, which suggests that decentralized exchanges have now reached local saturation. As growth continues through the end of the year, the outlook for 2022 is positive from here on out, although trading volumes are still a long way from hitting the May highs.

Featured image from Finance Magnates, charts from Arcane Research and TradingView.com