CoinGecko: centralized exchanges still dominant, despite Binance

CoinGecko has just released its 2023 report on the crypto markets, which shows that centralized exchanges are still dominant, despite the issues faced by Binance. 

Binance is indeed by far the largest crypto exchange in the world, but due to the problems it had in 2023 with the authorities, it has lost market share. While still dominant, it is now slightly less so. 

CoinGecko crypto report: the dominance of centralized exchanges, Binance in the lead

The CoinGecko report reveals that 91.4% of cryptocurrency spot trading volumes occurred on centralized exchanges, with this percentage rising to 98% when considering crypto derivatives such as futures and options.

It must be said that it is quite obvious that derivative exchanges mainly take place on centralized exchanges, also because the latter can guarantee much faster transactions, and derivatives are mainly used by short-term traders and speculators. 

In fact, comparing the overall trading volumes, those of derivatives are much higher than spot volumes, and this also explains why centralized exchanges still have absolute dominance. 

In other words, decentralized exchanges are not competitive when it comes to crypto derivatives trading, and this lack of competitiveness is most likely also the reason why even in spot markets they have much lower volumes. 

Volumes in 2023

By adding up the trading volumes of centralized and decentralized exchanges, both for spot markets and derivatives, it is discovered that the months with the highest overall volumes were March and December. 

In March, there were several bank failures in the USA, which also led to a collapse in the crypto markets, although it was only a temporary collapse. 

In December, there was a small bull run of altcoins, awaiting the approval of Bitcoin spot ETFs.

Note that in these two months total volumes of approximately 4.3 trillion dollars have been recorded, which is more than 100 billion dollars on average per day, including holidays. 

The calmest month, on the other hand, was September, with only 1.8 trillion dollars (58 billion dollars on average per day). 

These are definitely high numbers, but still much more contained compared to those of other more traditional asset classes, such as stocks, precious metals, or bonds. 

Just think that gold alone has an average daily trading volume on the stock exchange of about 130 billion dollars, and to this we should also add those of silver, platinum, copper and similar in order to make a comparison. 

CoinGecko: Binance’s problems and the landscape of centralized exchanges

The problems of Binance started in February and intensified at the end of the year with the condemnation by the US Department of Justice. 

Despite this, trading volumes on crypto exchanges increased until March and remained low only from April to September, before starting to grow again in October. Furthermore, the monthly volumes reached in December were the same as those reached in March. 

So it seems that overall Binance’s issues have not affected either trading volumes or the dominance of centralized exchanges over decentralized ones, whose volumes have remained low throughout the year. 

The only impact on the markets from Binance’s issues has been a decrease in the exchange’s market share compared to others. 

It is therefore possible to affirm that crypto exchanges have withstood the problems of the main exchange in this market very well. 

During the year, Binance’s dominance has dropped from 64% to 44% in terms of volumes, with Bybit taking advantage of it more than anyone else, followed by OKX. Even HTX, formerly Huobi, has managed to significantly increase its market share. 

Decentralized exchanges

As for DEX, or decentralized exchanges, Uniswap still dominates, although its market share has dropped from 63% to 51% in terms of trading volumes. 

Who benefited the most was Pancake Swap, which had lost a lot from this point of view the previous year. 

However, Orca’s boom in December stands out, with 11% of all trading volumes on DEX.

Curve has also decreased, while THORswap has shown a significant increase. 

However, the monthly volumes are very low, as the peak occurred in March with 94 billion dollars, out of the total 4,300 of the entire sector. 

Even in September, monthly volumes had fallen below 35 billion dollars, and in December they only rose to 90 billion. 

Very interesting instead is the loss of dominance of Ethereum.

Due to the high fees, trading volumes on Arbitrum have increased significantly, making it the second chain for trading volumes on DEX in December. Ethereum’s dominance has dropped from 79% to 41%, with BSC and Solana experiencing strong growth. 

2023 has been a year of transition, especially for Arbitrum and Solana, but certainly not a brilliant year for DEX.