CEX vs DEX: Report from 2024 and forecasts for 2025
January 22, 2025
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The exchange platform sector was in turmoil in 2024. CEXs suffered repeated attacks from the SEC, while DEXs saw a huge increase in activity. We take stock of 2024 and look ahead to 2025.
Foreword: This article is partly based on our year-end 2024 report on the cryptocurrency market. We invite you to consult it for free or obtain it in physical version to support our work.
→ Also find our market report on Bitcoin (BTC) in 2024 :
Review of the CEX Sector
The year 2024 marked a significant evolution in the Centralized Exchanges (CEX) sector, continuing a trend from 2023, which was characterized by legal battles between the SEC and the cryptocurrency industry. Over the past 12 months, CEXs recorded a total trading volume of $14.3 trillion in the spot market, with notable peaks in March, November, and December.
At the forefront of this sector, Binance maintains its dominant position with a 35.6% market share at the end of 2024. However, this figure has been declining since January 2024 (39.6%) and January 2023 (60.1%). This decline can be partly attributed to stricter regulations in several jurisdictions, notably in the United States and Europe, which have constrained its local operations (we will revisit this later).
As a result, several platforms capitalized on these changes in 2024. Crypto.com, for instance, grew its market share from 3.25% to over 10% within 12 months. The platform’s traded volume surged by 812% over the year, rising from $31 billion in January to $283 billion in December.
Upbit occupies third place, with a market share of 8.5% in January 2024. This share dipped below 3% mid-year before rebounding to 8.6% in December. Conversely, Bybit saw its market share rise from 7.5% in January 2024 to nearly 13% in August before settling at 8.2% in December, securing its fourth-place ranking among centralized platforms.
The SEC vs. CEXs
Throughout 2023, the U.S. Securities and Exchange Commission (SEC) initiated a series of high-profile actions against major cryptocurrency platforms. In 2024, the SEC intensified its regulatory efforts targeting CEXs.
One of the primary points of contention for the SEC was the classification of certain assets or services as securities. The agency accused numerous cryptocurrency exchanges of offering services deemed as securities without proper authorization.
- In early 2023, Kraken faced penalties for offering staking services on Ether and other Proof-of-Stake assets, resulting in a $30 million fine. This marked one of the SEC's initial significant actions, setting the stage for ongoing disputes throughout 2024.
- In June 2023, the SEC filed lawsuits against Binance and Coinbase, accusing Binance of multiple violations (including unregistered financial operations) and Coinbase of listing unregistered securities. The SEC identified 68 cryptocurrencies as securities, including Ethereum, Solana, Cardano, Polygon, Cosmos, and Filecoin.
- By November 2023, Binance reached a settlement with the SEC, which included the resignation of its iconic leader, CZ, who pled guilty to violating U.S. anti-money laundering laws. Additionally, Binance admitted to breaking U.S. law and agreed to pay two fines: $3.4 billion and $968 million to the U.S. Treasury. These repercussions carried into 2024, with CZ serving four months in prison before being released in September.
In January 2024, the SEC intensified its efforts, targeting other major industry players. It bolstered allegations against Binance, accusing it of deceptive practices and lack of transparency, forcing the platform to cease operations in the U.S. and discontinue support for its stablecoin, BUSD. Meanwhile, Crypto.com attempted to preemptively sue the SEC, criticizing what it described as a hostile and inconsistent regulatory environment.
Early 2024 also saw the SEC renewing its attempt to bring Kraken to court over alleged securities law violations. Coinbase, despite being publicly listed, continued to contest these accusations, citing regulatory ambiguity regarding the classification of digital assets. Coinbase even threatened to exit the U.S. market if the situation did not improve.
Interestingly, the approval of spot cryptocurrency ETFs emerged as an anomaly amidst this regulatory crackdown. By design, Bitcoin and Ethereum spot ETFs classify the underlying assets as commodities, placing them under the jurisdiction of the Commodity Futures Trading Commission (CFTC) rather than the SEC.
In short, these legal battles dominated headlines in 2024 but aligned with the SEC’s broader efforts since 2023 to tighten its control over the cryptocurrency sector, which it views as largely non-compliant with existing laws.
However, the election of Donald Trump as U.S. President may signal a shift. During his campaign, Trump pledged to replace Gary Gensler, the SEC's current chair, widely criticized for his anti-cryptocurrency stance. This promise has been fulfilled, with Paul Atkins, an entrepreneur and vocal cryptocurrency advocate, announced as Gensler's successor.
→ See also our market report on spot crypto ETFs in 2024 :
The Resurgence of DEXs
The end of 2024 sets the tone for what could potentially occur in 2025—a resurgence of decentralized exchanges (DEXs) compared to centralized exchanges (CEXs). Several factors drive this trend: the massive trading volumes generated by memecoins on Solana, the revival of DeFi on Ethereum, and the emergence of Hyperliquid for perpetual trading (and soon increasingly for spot trading).
At the beginning of 2024, the trading volume on DEXs accounted for approximately 9.3% of the market share compared to CEXs. As expected, the trajectory of this DEX vs. CEX metric inversely correlates with the market's overall health; during euphoric periods, retail investors flock to centralized platforms.
Thus, this ratio dropped to 7.8% in February before climbing to 13.6% in October and surging to over 20% in January 2025—a historic first for the sector. Notably, Raydium (the leading DEX on Solana) increased its market share from 7.6% to over 26% in 2024, driven by the success of memecoin trading on Solana. Conversely, Uniswap's share fell from 42% to 31.5% over the same period, reflecting the general slowdown in activity on Ethereum this year.
In the battle between CEXs and DEXs, the evolving trends in futures markets are particularly intriguing. At the start of 2024, perpetual DEXs accounted for approximately 4.5% of futures trading volume compared to CEXs. By the end of 2024, this ratio had climbed to over 10%, largely fueled by Hyperliquid's success.
To delve deeper, centralized platforms processed $39.3 trillion in futures trading volume in 2024. Binance represented approximately 42% of the market share, followed by OKX (19%), Bybit (14%), and Bitget (12.7%). During the same period, Hyperliquid generated $478 billion in volume, roughly 40 times less than Binance.
However, Hyperliquid experienced tremendous success in the latter months of the year. In December, the platform recorded approximately $6 billion in daily trading volume—"only" seven times less than Binance’s $45 billion daily volume, which is remarkable for such a young and relatively inaccessible platform.
Conclusion
Despite Bitcoin’s growth in 2024, the cryptocurrency market has yet to attract a significant influx of new users to centralized platforms. Moreover, legal disputes with U.S. regulators and lingering memories of the FTX scandal have eroded user trust, prompting many to explore decentralized alternatives.
Seasoned investors in the market have gradually migrated to DEXs for trading activities, particularly to capitalize on better opportunities. These opportunities are increasingly found directly on blockchains like Solana or Base, evidenced by the success of memecoins and AI agents, necessitating the use of decentralized exchanges.
For many, Binance and Coinbase listings are no longer the "game changers" they were in previous years. While they can still drive buying pressure by opening access to new investors, a significant portion of users is already positioned through on-chain activities.
A recent example is Donald Trump’s memecoin, which launched directly on Solana and achieved significant market capitalization levels well before being listed on centralized platforms. The paradigm has shifted, with more capital migrating to blockchains. This shift is reflected in the growing dominance of DEXs in the DEX-to-CEX ratio.
→ Continue reading with our latest analysis on ai16z (AI16Z), the mine of AI agents in 2025 :
