Derivatives trading on decentralized exchanges (DEXs) is forecast to more than double this year as more investors opt for cheaper and more liquid alternatives to centralized platforms.
According to the dYdX “Annual Ecosystem Report 2024,” DEX derivatives volumes grew 132% last year to reach a record $1.5 trillion. Perpetual DEX volumes were valued at $81 billion in January before skyrocketing to $242 billion by December.
Assuming the same growth rate, dYdX expects total DEX volumes to reach $3.48 trillion in 2025.
DEXs have also become a popular venue for spot trading, more than doubling their spot market share from 9% to 20%, the report said.
Perpetual DEX volumes have surged since 2023, and the trend is expected to continue this year. Source: dYdX
While surging DEX volumes are a reflection of the crypto bull market, these platforms also attract users due to their low transaction fees and greater access to more speculative assets.
For example, DEX trading volumes on Solana have skyrocketed due to the memecoin frenzy. In early January, daily trading volumes on Solana-based DEXs exceeded Ethereum and Base combined.
Related: Decentralized exchange volume hits record high of $462B in December
US reporting requirements could push more users toward DEXs in the short term
Despite the inauguration of the pro-crypto Trump administration, certain reporting requirements affecting centralized exchanges in the United States may compel more traders to opt for DEXs.
Beginning this year, the US Internal Revenue Service will require centralized exchanges and other brokers to report digital asset transactions. The reporting rules will expand to DEXs in 2027.
While the IRS said this rule should help investors “file accurate tax returns” on their crypto, some industry participants view it as an overreach.
There’s a “real risk of pushing users toward decentralized platforms like Uniswap or PancakeSwap,” government blockchain expert Anndy Lian told Cointelegraph.
“While decentralized systems currently pose challenges for tax enforcement, advancements in blockchain analytics and potential regulatory developments by 2027 could change this landscape,” said Lian.
The IRS’ reporting rules have faced heavy opposition from the crypto industry, with the Blockchain Association suing the tax agency in December. According to the lawsuit, the IRS has overstepped its statutory authority and has violated the Administrative Procedure Act.
Related: DeFi has 3 options if IRS rule isn’t rolled back — Alex Thorn