Crypto’s P2P Exchanges Lose Ground
Crypto exchanges face pressure to improve services amid a decline in market share. Crypto diehards predicted a golden period for peer-to-peer trading venues like Uniswap and dYdX after the collapse of FTX, which undermined trust in centralized platforms.
Decentralized exchanges experienced a 76% drop in monthly spot trading volumes to $21 billion in June 2022, surpassing centralized rivals’ 69% drop to $429 billion. The market share of peer-to-peer digital-asset platforms fell to 5% from a 2023 peak of 7%.
Institutional investors find trading on peer-to-peer exchanges difficult or impossible, despite improvements in design and platforms’ age.
A PwC survey found that decentralized exchanges face compliance challenges due to their unregulated nature. CoinShares International Ltd.’s head of product, Townsend Lansing, attributed the regulatory overhang to hindering these protocols. Despite struggles in volume, monthly active users have increased since 2020, reaching 1 million for most of this year. This may reflect concerns about centralized platforms’ future following FTX’s bankruptcy and fraud allegations.
(With inputs from Shikha Singh)
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