Centralized Exchanges Integrate DEX Features, Boosting Trading Volume 20%

Centralized exchanges (CEXs) are increasingly integrating decentralized exchange (DEX) features, transforming into hybrid platforms. This trend reflects a growing effort to blend the strengths of both centralized and decentralized models to cater to a broader range of users, including traditional investors and DeFi enthusiasts. The integration of DEX functionalities allows CEXs to retain users while complying with regulatory requirements such as Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols.

Several major exchanges have already launched hybrid platforms. For instance, a new version of a platform enables CEX users to purchase DEX tokens without the need for withdrawals, combining the convenience of CEXs with access to decentralized tokens. Similarly, MEXC introduced DEX+, which blends on-chain and off-chain trading to provide a seamless user experience. This trend highlights the industry's shift towards integrating centralization and decentralization to appeal to both traditional users and DeFi participants.

The rise of DEXs began in 2020, with platforms like Solana contributing to their sudden growth. However, DEXs started losing momentum in 2022 and 2023. By the beginning of 2024, DEXs accounted for just 9.3% of the trading volume market share compared to CEXs. Nevertheless, by January 2025, DEXs surpassed $320 billion in monthly trading volume, capturing over 20% of the spot trading volume for the first time in crypto history. This surge indicates a rising preference for DEXs among crypto traders.

According to data from DeFiLlama, the Total Value Locked (TVL) in DEX was approximately $163.6 billion at the beginning of 2022. In 2023, the TVL dropped to around $52 billion and remained at that level for most of 2024. However, by December 2024, this figure had surged to around $140 billion, marking an increase of nearly 160% since the beginning of the year. This significant increase in TVL further underscores the growing popularity of DEXs.

Despite the advantages of hybrid platforms, there are challenges to consider. Integrating on-chain and off-chain systems requires complex infrastructure, which can lead to errors or high gas fees for DEX users. Additionally, hybrid platforms may face stricter regulatory scrutiny, especially when combining CEX’s fiat-to-crypto trading with decentralized tokens. However, given the benefits outlined, it is expected that more hybrid platforms like Binance Alpha 2.0 and MEXC DEX+ will continue to emerge in the future.