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In 2024, DEXs (decentralized exchanges) captured a larger share of the crypto trading pie, showing that the future of finance is firmly on the path to decentralization.
And Trump’s recent victory has only reinforced this trend, with Bitcoin’s price rising to almost $91,000.
As monthly DEX trading volume rose above $250 billion for the first time since 2021 in March and June 2024, it is clear that traders are increasingly opting for the benefits of autonomy and transparency that these platforms offer.
Over the past twelve months, several DEX platforms have refined their offerings to improve the trading experience while prioritizing financial inclusion and trust.
This evolution indicates that the market is not just making progress it has reached a level of maturity that some skeptics never expected. But these successes did not come without some hurdles.
As 2025 approaches, the achievements and setbacks of 2024 serve as a roadmap for the direction the market is heading.
While no crystal ball can predict the future, one can assume that the steady shift from CEXs (centralized exchanges) to DEXs is just the beginning.
DEX developments and challenges in 2024
This year, the DeFi (decentralized finance) landscape continued to grow significantly, mainly due to advances in concentrated liquidity models.
While these improvements improve DeFi by providing greater capital efficiency and allowing users to concentrate liquidity in specific ranges, it is no secret that these advances were achieved at the expense of liquidity providers.
On the governance front, 2024 saw the rise of “DAO wars,” with various DAOs (decentralized autonomous organizations) making strategic maneuvers to assert dominance.
This organizational rivalry adds an additional layer of complexity to the DeFi ecosystem, with DAOs fighting for control, creating opportunities and risks for participants.
As DAOs compete for influence, they have experimented with new voting mechanisms, management strategies, and community incentives to attract and retain participants.
This competitive environment has led to both innovation and volatility, with some DAOs forming alliances to strengthen their positions while others engage in aggressive tactics to undermine their rivals.
In January 2024, a blockchain interoperability project launched a crypto bridge to allow a staked ETH token to move across multiple blockchains, but did so without waiting for approval from the token’s governing body.
This move sparked controversy, with critics accusing the project of overstepping its bounds and trying to give users an edge over its competitors.
These challenges are especially important because they expose the limitations and vulnerabilities of decentralized governance, particularly in areas such as accountability and decision-making speed, further exposing the cracks in the community.
The rise of intent-based trading has also transformed the DeFi experience.
These tools have invited users to implement advanced cross-chain strategies and facilitate wallet seeding, improving the overall multi-chain experience.
This has streamlined functionality, allowing users to more efficiently navigate DEX complexities without having to manage multiple networks.
While we can’t know for sure what next year will bring, the past year can help DEX developers and users anticipate what lies ahead.
What to watch out for in 2025
The rise of AI in trading strategies is likely to improve market dynamics, allowing traders to optimize their DEX performance.
This integration has already taken off in the Netherlands TradFi and as DeFi continues to see sustainable growth, the technology’s inevitable integration will address challenges such as limited liquidity, slippage, and price manipulation.
The possibilities of AI are certainly compelling. The ability to predict price movements, identify arbitrage opportunities, and mitigate risk will only improve with more data, making it a crucial resource for DeFi and its participants.
As DeFi protocols continue to evolve, the focus has shifted to creating and using aggregated assets to address long-standing liquidity and user experience issues.
By pooling liquidity from different sources, similar to CEXs that accept deposits from different channels, DEXs can provide more efficient trading experiences.
For example, protocols can allow users to deposit different stablecoins, such as USDC, into a unified liquidity pool, simplifying the user interface and expanding trading pairs.
This aggregation also improves trade execution, reduces slippage and improves price performance.
However, as managing these complex assets becomes more difficult, so does the potential risk exposure to different types of assets.
When multiple deposit types are integrated into a protocol, a single exploit in one of the bridges or smart contracts can ripple across the entire ecosystem.
Ultimately, the vulnerabilities threaten a platform’s financial stability, but also expose the ecosystem to greater systemic risks.
Securing these shared assets will be one of the determining factors for growth and sustainability in 2025 and beyond.
On the regulatory front, tax structuring for digital assets has so far been an ill-conceived policy, often akin to the taxation of unrealized gains in traditional markets.
Under the Trump administration, it is expected that US taxes will be reduced and more nuanced, leading to better relationships between government agencies and decentralized organizations, and creating an environment that breeds opportunity and innovation rather than FUD (fear, uncertainty and doubt). .
While many crypto builders and activists believe that Trump will “make crypto great again,” only time can tell if that will actually happen.
While the future remains uncertain, the challenges of 2024 can serve as a roadmap for DEXs’ progress as we enter the new year.
While DEXs have their imperfections, their pros far outweigh the cons, positioning DeFi for a promising rise in the market.
In the coming year, expect DEX developers to deepen their commitment to creating a better user experience, focusing on building long-term solutions that support DeFi’s ongoing goals.
Eric Waisanen is the CEO and founder of Astro vault. A graduate of the University of California, Riverside, he is an experienced expert in economic design and monetization strategies for emerging technologies, specializing in tokenomics and business development for Web 3.0 projects.
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Credit : dailyhodl.com
