According to Token Terminal data, DeFi's annualized revenue has grown by nearly 150% compared to last year, reaching $42 million today. The most significant growth categories are DEXs (Decentralized Exchanges) and protocols offering liquidity mining, with weekly changes hitting the second-highest record ever.
How DEXs Work: A Technical Breakdown
The core component of a DEX is its smart contract deployed on a blockchain. Unlike traditional exchanges, DEXs eliminate centralized custody:
- Traditional Exchanges: User assets are pooled in the exchange’s custody. Withdrawals pull from this pool, and the exchange handles post-trade settlement.
- DEXs: Users retain control of their wallet private keys. Assets are held in smart contracts, and trades settle automatically via these contracts.
👉 Discover how DEXs enhance transparency and security
Performance Trade-Offs
While DEXs offer superior security, transparency, and privacy, they face challenges:
| Factor | Centralized Exchanges | DEXs |
|----------------------|-----------------------|--------------------|
| Speed | High (e.g., 100K TPS) | Lower (246.9 TPS) |
| Cost | Lower | Higher |
| Custody | Exchange-controlled | User-controlled |
The Synergy Between Centralized and Decentralized Exchanges
Jay Hao, CEO of OKX OKEx, emphasizes:
"Centralized and decentralized platforms aren’t rivals—they’re complementary."
OKX OKEx’s Hybrid Approach
- Lightning System 2.0: Handles 100K transactions/second, rivaling traditional securities systems.
- OKChain DEX: Processes 1400 TPS at peak, with 2-second block times.
👉 Explore OKX OKEx’s next-gen trading solutions
Why DEXs Matter
DEXs cater to users prioritizing:
- Self-custody (no reliance on third parties).
- Auditable transactions (on-chain verification).
- Resilience (no single point of failure).
As Jay Hao notes:
"OKX OKEx is committed to bridging both worlds—offering speed where needed and decentralization where demanded."
FAQ
Q: Are DEXs replacing centralized exchanges?
A: No. Each serves distinct needs—centralized for speed, DEXs for security.
Q: What’s OKX OKEx’s role in DeFi?
A: Providing infrastructure that marries both models, like OKChain’s high-speed DEX.
Q: How do DEXs protect privacy?
A: No KYC required; trades execute via smart contracts, not intermediaries.