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"DEX Derivatives Market to Hit $3.48T by 2025, Driven by Crypto Bull Market and IRS Reporting Rules"

Coin WorldTuesday, Jan 28, 2025 5:58 pm ET

1min read

The derivatives market on decentralized exchanges (DEXs) is projected to reach $3.48 trillion by 2025, according to the dYdX "Annual Ecosystem Report 2024." This growth is driven by investors seeking cheaper and more liquid alternatives to centralized platforms.

DEX derivatives volumes grew by 132% in 2023, reaching a record $1.5 trillion. Perpetual DEX volumes surged from $81 billion in January to $242 billion by December. Assuming the same growth rate, dYdX expects total DEX volumes to reach $3.48 trillion in 2025.

DEXs have also gained popularity for spot trading, more than doubling their spot market share from 9% to 20% in 2023. Perpetual DEX volumes have surged since 2023, and this trend is expected to continue in 2024.

The growth in DEX volumes reflects the crypto bull market, but these platforms also attract users due to their low transaction fees and greater access to more speculative assets. For example, DEX trading volumes on Solana have skyrocketed due to the memecoin frenzy, with daily trading volumes on Solana-based DEXs exceeding Ethereum and Base combined in early January.

US reporting requirements could push more users toward DEXs in the short term. The US Internal Revenue Service will require centralized exchanges and other brokers to report digital asset transactions beginning this year, with the rules expanding to DEXs in 2027. Industry participants view this as a potential overreach that could drive users toward decentralized platforms like Uniswap or PancakeSwap.

The IRS' reporting rules have faced heavy opposition from the crypto industry, with the Blockchain Association filing a lawsuit alleging that the IRS has overstepped its statutory authority and violated the Administrative Procedure Act.

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