Are Decentralized Exchange Tokens Better Investment in 2024 Than B…

Are Decentralized Exchange Tokens Better Investment in 2024 Than B…


decentralized exchange tokens vs bitcoin

YEREVAN ( – Bitcoin (BTC) price granted investors over 160% returns year-to-date, and could still rise, considering the bullish factors such as the possible approval of a spot Bitcoin ETF, Fed’s dovish policies, and the upcoming halving. However, Decentralized Exchange (DEX) tokens also rallied due to a lack of investor trust in Binance.

In detail, after Binance’s CEO Changpeng Zhao pleaded guilty to breaking anti-money laundering laws, Binance saw outflows, which could have benefitted decentralized exchanges. Did they? Let’s take a look.

Are Decentralized Exchanges on the Rise?

Decentralized Exchanges operate without a central authority, reducing the risk of censorship or control by a single entity. Many DEXs don’t require personal information for transactions, offering a higher degree of anonymity. Funds are typically stored in personal wallets rather than on the exchange, potentially reducing the risk of large-scale hacks.

On the other hand, since DEXs rely on smart contracts, any bugs or vulnerabilities in the code can lead to the loss of funds. Additionally, some DEXs may have lower liquidity compared to centralized exchanges, potentially leading to slippage and higher price volatility. And the ease of listing tokens on DEXs can lead to a higher prevalence of scams and low-quality projects.

So, did users prefer DEXs more after the Binance flop?

Meanwhile, the BNB market dominance decreased to 2% from over 5% at the beginning of the year. The drop could also result from the shattered trust between the exchange and its users.

decentralized exchange tokens
BNB market dominance. Source: Messari

Mikkel Morch, Chairman of crypto investment fund ARK36, told CoinChapter that the declining dominance could signify a push toward decentralized exchange tokens.

Binance’s waning dominance highlights the rising preference in the market for decentralized alternatives; their recent market-share slide comes as investors, wary of centralized exchange vulnerabilities, exposed by regulatory and legal issues, pivot towards DeFi and decentralized exchanges.

said Morch.

DEX Trading Volumes Up

According to crypto tracker CoinMarketCap, three out of five leading DEX token prices have jumped double digits in the previous month. For example, Uniswap (UNI) grew nearly 20% in price, while THORChain (RUNE) and Synthetix (SNX) prices rose 18% and 58% respectively.

Decetralized Exchange tokens.
Decentralized Exchange tokens. Source: CoinMarketCap

The rise was partially due to the overall bullish sentiment on the market. So, let’s take a closer look. According to decentralized finance tracker DeFiLlama, Uniswap’s total value locked (TVL) increased from $3 billion to over $4 billion quarter-to-date, while trading volumes increased to $600 million in early December.

decentralized exchange tokens DEX
Uniswap DEX TVL. Source: DeFiLlama

Similarly, the decentralized exchange token Synthetix TVL more than doubled in Q4, reaching $821 million on Dec 14. Additionally, the trading volumes reached $280 million in early December.

synthetix tvl and volume
Synthetix TVL and trading volume. Source: DeFiLlama

Is Bitcoin Catching Up?

Generally, investors continued to park their cash with crypto funds. On Dec. 11, asset manager CoinShares reported another $43 million of net inflows the previous week, continuing an 11-week streak totaling $1.88 billion, with $1.7 billion in Bitcoin only.

decentralized exchange tokens
Cryptocurrency inflows. Source: CoinShares

Can Decentralized exchange tokens beat Bitcoin’s prospects? As a leading cryptocurrency with $830 billion in market cap, Bitcoin is less volatile than small-cap tokens can be. Thus, investors could consider a long-term investment ahead of the halving. However, DEX tokens could still ride the wave of ‘distrust in the man’ and grant their users short-term returns greater than Bitcoin ahead of 2024 interest rate cuts.


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