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Comparing platform tokens and decentralized exchange tokens' upward momentum: Which side is stronger?

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Comparing platform tokens and decentralized exchange tokens

It is no exaggeration to say that 2020 is the year of the rise of decentralized exchanges (DEX). In addition to the growth in ecosystem and trading volume, the cryptocurrency research firm Messari compared DEX tokens with centralized exchange platform tokens. The increase in DEX tokens from the beginning of the year to now is more than five times that of centralized exchange platform tokens.

DeFi Concept Tokens Soar

On June 10, DeFi concept tokens were consolidated, and it was found that Aave, Kyber, Band, and Loopring have seen the largest price increases this year. Although the market value of decentralized finance-related cryptocurrencies is still low, it is undeniable that they have been a highly speculative area in the market in the past two years.

In addition to the above-mentioned DeFi concept tokens, a recent analysis of the true valuations of exchange platform tokens revealed that the current prices of BNB, HT, OKB, and FTT are undervalued. When compared to DEX tokens, the performance of exchange platform tokens this year is incomparable.

DEX vs. Exchange Platform Token Price Increases

From the beginning of the year until the 11th, the average price increase of DEX tokens was 241%, while exchange platform tokens only saw an average growth of 44%. Kyber (KNC) led with a nearly 520% price increase, followed by LRC (331%) and AST (244%).

Among exchange platform tokens, OKB ranked first, followed by HT and LEO.

Exchange Platform Token and DEX Token Price Increases (Source: Messari)

Messari researcher Jack Purdy pointed out that the trading volume of DEX has increased from $5 million to $25 million. Although it only accounts for 0.5% of the crypto market, it has doubled from 2019 (0.25%).

The progress of DEX this year is mainly attributed to aggregator projects that can aggregate orders from various exchanges and distribute token trading across multiple DEXs, including 1inch.Exchange and DEX.AG.

Furthermore, mainstream DEXs are also poised for significant upgrades, including optimizations for scalability and incentive mechanisms, which have piqued investors' interest in their tokens.

DEX Protocol Roadmap (Source: Messari)

Although the significant growth of DEX has excited many supporters of DeFi and decentralized concepts, in reality, the trading volume and profitability of centralized exchanges still surpass DEX.

Purdy concluded that while DEX still has a long way to go to achieve the profitability of centralized exchanges, its advantages lie in not relying on or trusting centralized entities. The profit model coded into it is more verifiable, and it can evenly distribute fee revenues to users. In terms of economic models and user trust, the future outlook is more promising for DEX compared to centralized exchanges.

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