Traders Flock to DEXs as CEX Outages and Custody Risks Fuel Shift

Decentralized exchange (DEX) trading volume surged to an unprecedented $613.3 billion in October, a 22.7% jump from September's $500 billion, according to data from DefiLlama and The Block. This record marks a pivotal moment for the crypto market, as traders increasingly shift toward non-custodial platforms amid volatility and regulatory scrutiny. Uniswap led the charge, processing $170.9 billion in trades—up from $106.5 billion in September—while PancakeSwap followed with $101.9 billion, a 27.7% monthly increase.

The surge coincided with a broader market downturn, including a sharp drop in Bitcoin's price to $104,600 on Oct. 17. Traders flocked to DEXs for liquidity mining, yield strategies, and self-custody solutions, driven by concerns over centralized exchange (CEX) failures. For instance, dYdX faced criticism after a $462,000 compensation proposal was proposed to traders affected by an eight-hour chain outage during the Oct. 10 market crash, according to Cointelegraph. Meanwhile, Binance retained its dominance in the CEX space with $810.4 billion in October volume, up from $636.5 billion the prior month, though DEXs now account for 19.84% of total exchange volume, according to Yahoo Finance.

Ethereum's stablecoin ecosystem also saw explosive growth, with $2.82 trillion in October transactions — 45% higher than September. USDC and USDT drove much of the activity, contributing $1.62 trillion and $895.5 billion, respectively. Stablecoin protocols generated 65–70% of daily crypto protocol revenue, outpacing lending platforms and DEXs, according to Bitcoin.com.

New DEX projects are capitalizing on the trend. Terminal Finance, a yield-focused DEX incubated by Ethena, secured $280 million in pre-deposit liquidity ahead of its launch, signaling strong demand for yield-bearing stablecoin trading. CEO Sam Benyakoub emphasized the structural advantages of DEXs, including deterministic smart contract execution and the absence of custodial risks. Meanwhile, Binance founder Changpeng Zhao (CZ) purchased $2 million in ASTER tokens, a move that pushed the DEX token up 20% despite a recent 11% price drop.

The DEX-to-CEX volume ratio's rise to 19.84% reflects growing trust in decentralized platforms, particularly as on-chain activity weakens. Ethereum's daily active addresses fell 24% to 363,000 in October, while its MVRV ratio dropped to 1.50, indicating a cooling market. Analysts suggest renewed volatility from macroeconomic events or geopolitical tensions could further boost DEX activity, Yahoo Finance reported.

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