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Chukwuemeka Raphael
May 30, 2022
by Chukwuemeka Raphael

Why do Decentralized Crypto Exchanges have Poor Visibility?

decentralized crypto exchanges
Decentralized crypto exchanges allow users to interact with one another in a peer-to-peer environment. In decentralized exchanges, funds are not controlled by a central wallet. Users' funds are not accountable to the exchange since they are not custodians of the funds. In most cases, users' web wallets or app extensions are used to enable decentralized exchange protocols.

According to CoinMarketCap, 526 cryptocurrency exchanges are listed at the time of writing. 217 of these are decentralized exchanges. Thus, only 41.25 % of the cryptocurrency exchanges currently listed on CoinMarketCap are decentralized exchanges.

Uniswap (V2) is the largest decentralized cryptocurrency exchange, with a 24-hour trading volume of about $1.09 billion. In contrast, Binance's exchange executed over $9.73 billion in the last 24 hours. Uniswap (V2), Pancakeswap, dYdX, Kine Protocol, Honeyswap, and Curve Finance are some of the prominent decentralized cryptocurrency exchanges. The decentralized exchanges with the lowest ranking are SashimiSwap, MOV, BEPswap, Demex, IDEX BSC, and Unifi Protocol DAO.

Some of the pros of decentralized crypto exchanges include no regulation, low transaction fees, no account bans, and more trading options. The cons include price manipulation, trading of scam assets, low safety, and few funding options.

However, irrespective of the pros and cons associated with decentralized exchanges, some of the factors that are responsible for their low visibility are:

  1. Negative sentiments

  2. Low liquidity

  3. Safety issues

    4. Negative Sentiments

    Investors prefer trading on centralized exchanges instead of using decentralized exchanges. Due to this, crypto token holders put pressure on the launch teams to list the cryptocurrency tokens on centralized exchanges. These negative sentiments have impacted the growth and visibility of some decentralized exchanges. It is worth noting that decentralized crypto exchanges that deal in decentralized finance (DeFi), like Uniswap (V2), and support tokens on Binance Smart Chain, like Pancakeswap, are not affected by these sentiments.

    Low liquidity

    Liquidity refers to the ability of a crypto asset holder to convert their asset to cash or other cryptos with ease. The lack of users on decentralized exchanges makes some asset holders place a sell order for days before it could be executed due to low liquidity. However, large funds in centralized exchanges make this possible with ease.

    Safety

    In decentralized crypto exchanges, users are responsible for the security of their funds. Many users are leery of using decentralized exchanges. People fear high risks as these exchanges invest fewer funds in the safety of users. This is due to their low transaction fees, unlike the high fees that are associated with trades on centralized exchanges. Hacking victims on decentralized exchanges face all the losses.

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    Why do Decentralized Crypto Exchanges have Poor Visibility?
    Chukwuemeka Raphael
    Chukwuemeka Raphael is an author and cryptocurrency news writer/analyst. As a Mathematics graduate and trained analyst, he combines his Math knowledge and strong reading culture in contributing content and analysis for the development of cryptocurrency and blockchain space.

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