Coinbase Trade Volume Surpasses Uniswap’s, Countering Expectations for a DEX Surge

Many market observers expected a surge in the use of decentralized exchanges following the collapse of FTX, but analysts said many DEXs offer a less-user-friendly experience than centralized ones.

AccessTimeIconFeb 27, 2023 at 8:16 p.m. UTC
Updated Feb 28, 2023 at 6:15 p.m. UTC

Cryptocurrency exchange Coinbase’s trading volume has surpassed the popular decentralized exchange platform Uniswap’s this year, according to a report from crypto data firm Kaiko.

As of Tuesday, trading volumes for Coinbase had reached about $93 billion, nearly double the $57 billion on Uniswap, Kaiko said. At one point in 2022, the exchanges’ respective volumes were nearly equal.

Following last year’s collapse of the FTX exchange and other centralized entities in the crypto ecosystem, market watchers anticipated seeing more traders pivot to decentralized exchanges (DEX), and at one point in 2022 that shift seemed to be occurring. But DEXs have presented challenges for users.

Data from analytics platform DefiLlama showed that November trading volumes on decentralized platforms surged to $113 billion, their highest monthly level since May, but they now seem unlikely to surpass $100 million this month, based on daily volumes.

Conor Ryder, research analyst at Kaiko, said the calls for a transition to DEXs look “a bit premature” as centralized exchanges (CEX) still serve a critical role in onboarding the average investor.

“Presumably the average investor has still put off by the worse user experience on some of these DEXs, compared to the more straightforward experience on CEXs,” Ryder told CoinDesk in a direct message on Twitter. “I think CEXs will always be an essential part of the exchange landscape, whether we like it or not.”

Lucas Outumuro, head of research at blockchain analytics firm IntoTheBlock, said the initial spike in demand for noncustodial trading and decentralized finance (DeFi) at large after the meltdown of FTX has “waned out.” Outumuro highlighted that the daily number of new Ethereum addresses along with trading volume remained small on DeFi exchanges.

According to data from IntoTheBlock, the daily number of newly created Ethereum addresses reached some 228,000 on Nov. 24, their highest level since May 2021, but has retreated to less than 90,000 daily.

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The chart shows the daily number of newly created Ethereum addresses retreated to less than 90,000 daily. (IntoTheBlock)

“Getting onboard into Coinbase is much more similar to what people are used to with other tech or finance platforms, whereas getting into Uniswap is a completely different flow,” Outumuro told CoinDesk in a Telegram message. “This makes adoption take a little longer as new users may feel intimidated.”

JPMorgan strategists wrote in a note in November that slower transaction speeds, pooling of assets and order-traceability features are likely to limit institutional participation. The analysts noted the absence of a limit order/stop loss feature on DEXs, their dependency on price oracles that source data from centralized exchanges, vulnerability to hacks, exploits, the need for over-collateralization and systemic risks from the cascade of automated liquidations as hindrances to widespread adoption.

"While there has been some increase in the share of DEX in overall crypto trading activity in recent weeks, this is more likely to reflect the collapse in crypto prices and the deleveraging/automatic liquidations that followed the FTX collapse," the authors wrote.

CORRECTION (Feb. 28, 2023, 18:14 UTC): Based on Kaiko's corrections to its report, story updates trading volumes in paragraph three and chart.


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Jocelyn Yang is a markets reporter at CoinDesk. She is a recent graduate of Emerson College's journalism program.

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