Introduction to DeFi Dominance
The landscape of decentralized finance (DeFi) has undergone significant transformations since the boom-and-bust cycle of DeFi summer 2020. Initially driven by experimentation, hype, and unsustainable incentives, DeFi has evolved to focus on fundamentals, infrastructure, and real adoption. According to Rachel Lin, Co-Founder and CEO of SynFutures, 2025 is poised to be the year DeFi overtakes centralized exchanges (CEXs). This shift is attributed to the bear market in 2023 and 2024, which eliminated DeFi projects lacking product-market fit and forced others to mature and focus on infrastructure and adoption.
Development of Decentralized Exchanges
Decentralized exchanges (DEXs) have made significant strides in offering speed and user experience comparable to CEXs by leveraging high-performance chains and building their own infrastructure. The improvement in blockchain latency has enabled the viability of fully on-chain order books, addressing previous capital and liquidity efficiency issues. New hybrid designs combine automated market makers (AMMs) with order execution from order book exchanges, mitigating slippage and depth issues. For instance, 
the growth of DEXs like GMX has been notable.
DeFi’s Growing Market Share
From a numerical perspective, the top ten DEXs facilitated $876 billion worth of spot trades in the second quarter, representing a 25% increase quarter-on-quarter. In contrast, CEXs saw their spot volume fall 28% to $3.9 trillion, pushing the volume ratio between the two to a record low of 0.23. The resurgence of DeFi is also evident in lending protocols, which have seen a 959% increase in activity since late 2022. Aave, for example, now has enough deposits to be among the 40 largest banks in the United States, demonstrating the growing size and credibility of DeFi.
Regulatory Clarity and Trust
The broader crypto market is finally offering more regulatory clarity, encouraging leading DeFi protocols to collaborate with regulators and operate within clearer frameworks. Uniswap has taken a prominent role in advocating for sensible policy discussions that would legitimize the transparency and self-governance of DeFi. The preference for on-chain systems is evident during moments of regulatory tension, such as the SEC’s lawsuits against Binance and Coinbase, when traders quickly migrated to decentralized exchanges and volume increased by 444% within hours of the announcements.
CeFi’s Attempts to Imitate DeFi
Some CEXs have started integrating on-chain infrastructure directly into their platforms, attempting to leverage the benefits of DeFi. For instance, Coinbase has integrated Aerodrome, a spot DEX built on Base, allowing users to access decentralized liquidity while remaining within a familiar interface. However, this move still retains Coinbase as a point of distribution, raising questions about the true decentralization of these new ecosystems and products.
A Look into the Future
Unless CEXs fundamentally reinvent their models, they risk becoming irrelevant as DEXs continue to deliver updates and innovations at a fraction of the time and cost. The trust of the crypto community tends to favor systems integrated into code rather than those based on company promises. As liquidity and trading volume flow back into the market, decentralized entities are taking a disproportionate share of these funds. The start of DeFi dominance is just around the corner, signaling a more resilient and user-rich financial ecosystem.
For more information on the future of DeFi and its potential to overtake centralized exchanges, visit https://cointelegraph.com/news/crypto-belongs-to-decentralized-markets?utm_source=rss_feed&utm_medium=rss_tag_regulation&utm_campaign=rss_partner_inbound
