The opinions on DEX shared yesterday have sparked a lot of controversy, which is a good thing. After all, everyone is thinking critically. From my personal perspective, Perp DEX mainly addresses three areas of demand:
- Real-name KYC + AML
This direction is the largest application in DEX. Previously, when only spot trading was available, there were some restrictions. Now, with the opening of contracts, the use of matched trading can resolve some non-compliant funding issues, but I won't delve into that further.
- Support for small tokens and high leverage
Some new coins and meme coins may not be supported by centralized exchanges immediately, but DEX does not have such concerns. Even newly listed tokens can be bet on with hundreds of times leverage.
- Transparency and liquidation mechanisms
Many users often accuse centralized exchanges of maliciously manipulating the market. On-chain DEX is more transparent, especially in trading pairs involving small tokens.
Of course, there are also aspects like self-custody of funds. I truly believe that decentralized exchanges will gradually become mainstream in the market, but this will take time. After Uniswap gained popularity, many people said that DEX would have the opportunity to replace CEX, but DEX has not only failed to replace CEX to this day, but coins listed on CEX still enjoy better liquidity.
One reason is that CEX has a lower threshold, providing a one-stop solution for all steps from deposit to trading to withdrawal. Another reason is that CEX is subject to legal or social media (reputation) oversight, which results in a more complete risk warning and compensation mechanism. To put it simply, even after the collapse of FTX, they were able to compensate users. However, if private keys on-chain are stolen, it’s basically game over. This does not mean that CEX is necessarily better than DEX, but under the current circumstances, especially among leading CEX, they still offer the best depth and liquidity.
I have seen many reasons why users choose DEX or Perp DEX, and it largely revolves around support for small tokens and high leverage. Some users can also earn through the LP mechanism. Conversely, traditional CEX tends to perform better in terms of investment returns. Many users also use DEX primarily for the expectation of airdrops, which is completely normal, but there is indeed a situation where DEXs are clustered together. The differences between each DEX are actually narrowing.
As more and more investors recognize the importance of compliance and branding, the era of disorderly competition has passed for CEX. The sense of security brought by branding is more important, so CEX is more focused on how to "serve" users. In contrast, DEX is competing primarily on "customer acquisition," supporting more small tokens, more chains, higher leverage, and offering more rebates, but there is still significant room for actual innovation.
The reason many people are discussing DEX or Perp DEX now is not because of how well they are developing, but because there is a meme coin that is willing to pump and a prominent figure willing to shout out. More users feel they have missed a huge opportunity and are looking for a second or third chance to change their fate, rather than because they have fundamentally made innovations. The current DEXs are still focusing on providing smooth, deep, and fast transactions similar to CEX. The development of DEX still needs time, and the entry of large amounts of capital requires more genuine reasons beyond "special" demands.
I also believe that DEX will be an important direction for the future, but today's hype is more driven by market opportunities rather than fundamental innovations. True large-scale adoption requires providing new reasons in compliance, capital efficiency, and product innovation, rather than just relying on high leverage, small token stimulation, airdrop expectations, and money laundering needs.
This article is sponsored by #Bitget | @Bitget_zh
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