Chapter 2: Paradigm Shift — How DEX and CEX Interact and Evolve
This chapter analyzes how decentralization reshapes centralized exchanges through the three core pillars of trading, on/off-ramps, and cross-chain. On the trading pillar, L2 scaling markedly boosts performance and lowers cost, letting DEXs approach—or in some cases surpass—CEXs on speed, cost, and security. On on/off-ramps, the rise of compliant stablecoins is eroding CEXs’ exclusive advantage in fiat connectivity, though in the near term CEXs remain critical for compliance and TradFi integration. On the cross-chain pillar, ZK-proof-based bridges deliver cryptographic guarantees for multi-chain interoperability, reducing reliance on centralized intermediaries. Drawing on post-FTX user-migration data and industry observation, we argue: DEX growth is accelerating, not as a foregone replacement of CEXs, but as a co-evolution toward a new market structure.
1. The Three Core Pillars of an Exchange
Trading: Provide high-efficiency, low-cost, high-liquidity venues for asset exchange.
On/Off-Ramp: Bridge the fiat world and crypto economies.
Cross-Chain: Enable seamless movement and swap of assets across blockchains.
2. Decentralization Trends Across the Three Pillars
Pillar I — Trading: L2 scaling breakthroughs. L2 DEXs push latency to the millisecond range and fees to mere cents, steadily narrowing the gap with CEXs while retaining non-custodial control and L1-grade security. By 2025, DEX market share reached ~23%; the top-10 DEXs posted quarterly volume of $876.3B—still below CEXs overall, but growing at 2× the pace of CEXs [1].
Pillar II — On/Off-Ramp: Stablecoins open new paths. As global stablecoins move into compliance, users can increasingly convert directly via bank accounts, bypassing parts of the CEX flow. In 2024, stablecoin volume hit $25.8T, with average daily volume up 237% year over year, underscoring their central role in on/off-ramping [2]. That said, CEXs remain indispensable for regulation, deep liquidity, and large institutional flows.
Pillar III — Cross-Chain: ZK bridges usher in a new phase of interoperability. ZK-proof bridges secure cross-chain transfers with math and cryptography, lowering dependence on centralized intermediaries and paving the way for an open, interconnected multi-chain world. L2s now account for 30%+ of Ethereum on-chain transactions [3]; cross-rollup MEV share is ~0.03–0.05% on Arbitrum/Base/Optimism and ~0.25% on zkSync, signaling active—and valuable—cross-chain markets [4].
[1] DEX market share up as CEX volume drops (Yellow, Q2 2025)
[2] Stablecoin volume and growth in 2024 (CEX.io Blog)
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