The Next Era Of Crypto Belongs To Decentralized Markets

Opinion by: Rachel Lin, Co-Founder and CEO of SynFutures

DeFi has come a long way since the boom-bust cycle of DeFi Summer of 2020. Much of the rally in the early days was driven by experimentation, hype, and unsustainably high incentives.

Five years later, the foundations of DeFi look very different. Last year’s experience was a quiet consolidation phase, paving the way. 2025 may be remembered as the year DeFi surpassed centralized exchanges (CEXs).

The bear market of 2023 and 2024 wiped out many DeFi projects that lacked product market fit, and forced other DeFi platforms to mature, focusing on infrastructure and achieving real adoption.

Decentralized exchanges have evolved

While the collapse of Celsius and BlockFi and the bankruptcy of FTX exposed the inherent weaknesses of many centralized platforms, decentralized exchanges (DEXs) sought to offer similar speed and user experience, leveraging high-performing chains and building their own infrastructure.

Equally important, as blockchain latency improves, entire onchain order books become viable, allowing DeFi protocols to begin to address previous weaknesses in capital efficiency and liquidity.

Moving beyond the aggregation-based models of early perpetual DEX exchanges like GMX, new hybrid designs combine automated market makers (AMMs) with order execution of order book exchanges, or support only direct order books, enabling more efficient liquidity to be provided to traders by mitigating slippage and depth issues.

DeFi is grabbing market share

From a numbers standpoint alone, Q2 saw the top 10 live-to-market exchanges facilitate $876 billion in spot trades (up 25% from the previous quarter). In contrast, exchange-traded exchanges saw spot trading volumes fall 28% to $3.9 trillion, pushing the volume ratio between the two to a record low of 0.23 in the second quarter.

The resurgence of DeFi can be attributed to the growth of trading. For example, lending protocols have outperformed their centralized counterparts. registration A meteoric 959% jump in activity since late 2022. Aave now holds enough deposits It is ranked among the 40 largest banks in the United Statesa testament to the growing scale and credibility of DeFi. Meanwhile, Coinbase’s partnership with Morpho to launch bitcoin-backed loans via CBBTC, which are routed directly through the Morpho onchain’s infrastructure and liquidity, signals a broader shift towards native DeFi infrastructure.

Related to: Aave DAO proposes an annual token buyback of $50 million using DeFi revenues

People clearly prefer transparency and automation in onchain lending after seeing a series of CeFi lenders go bankrupt. Whether in terms of trading volume or credit provision, DeFi has created a groundbreaking growth lead that cannot be ignored.

Organization and renewed confidence

The other side of the DeFi growth story is that the broader cryptocurrency market is finally offering more regulatory clarity. Rather than pushing innovation outwards, this shift encourages leading DeFi protocols to engage with regulators and operate within clearer frameworks. For example, Uniswap has played a prominent role in Advocating for sensible political debates This would legitimize DeFi’s transparency and self-policing.

Coincidentally, users’ preference for onchain systems is particularly pronounced during moments of regulatory tension, such as the SEC’s decision. Lawsuits Versus Binance and Coinbase, when traders quickly migrated to decentralized exchanges, with volumes rising 444% within hours of the announcements. The message was clear: when regulation is tightened, activism does not disappear. It simply evolves on the chain.

Security and detention risks have reinforced this shift. Between 2012 and 2023, centralized exchanges lost nearly $11 billion due to hacks and mismanagement.

This is 11 times more than what was stolen directly from decentralized protocols or wallets. For many users, holding assets on a large exchange has proven to be much riskier than using self-custodial and DeFi smart contracts.

CeFi imitates DeFi, and is still lagging behind

Unable to ignore the momentum of DeFi, some CEX exchanges have started integrating onchain infrastructure directly into their platforms. For example, Coinbase has integrated Aerodrome, the leading DEX platform built on Base, Coinbase’s layer 2 network, allowing users to benefit from decentralized liquidity while remaining within a familiar interface — a notable move, but one that still maintains Coinbase as the distribution point.

The Binance ecosystem provides another clear example. The BNB chain reached record levels in October and attracted millions of active users. Most of this rally was driven by Aster, a permanent DEX exchange on the BNB chain that has sparked speculation about direct ties to Changpeng “CZ” Zhao. If many of the same founders behind exchanges are now building in the decentralized space, one might wonder how decentralized these new ecosystems and products really are.

Fundamental metrics speak to the same truth. By late 2024, TVL numbers It has rebounded to nearly $130 billion, approaching all-time highs and continuing to rise. In sectors such as financial derivatives, asset management and payments, DeFi capabilities have transcended traditional venues, offering increased transparency and permissionless access.

Centralized exchanges, with their heavy compliance burdens and cross-jurisdictional impacts, are finding it increasingly difficult to move quickly. Many CEXs are withdrawing. crypto.com newly It has been minimized US operations have delisted several tokens and even delayed the launch of new products pending regulatory clarity. OKX has also been cautious about expanding its decentralization initiatives amid changing compliance expectations.

In contrast, live implementation platforms operate using smaller, code-based architectures, allowing them to ship updates and innovation in a fraction of the time and cost. They can deploy new features as quickly as the software, whether that’s support for real tokenized assets, innovative return strategies, or integration with AI-enabled trading agents.

A peek into the future

Unless CEXs fundamentally reinvent their models, they risk becoming irrelevant, especially since simply copying some DeFi features or offering self-custody options may not be enough for customers.

The confidence of the cryptocurrency community has moved towards systems that are “built into the code” rather than those built on corporate promises. Interestingly, when liquidity and trading volumes returned to the market recently, decentralized entities captured a disproportionate share of these funds.

The primacy of DeFi has dawned, signaling a more flexible and empowering financial ecosystem for users in the future.

Opinion by: Rachel Lin, Co-Founder and CEO of SynFutures.

This article is for general information purposes and is not intended and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.