CZ’s Verdict: DeFi Crushes CEX in Epic Showdown – Centralization Loses Big

Forget Wall Street's love affair with middlemen—decentralized finance just scored a knockout blow against traditional exchanges.

The Decentralization Dividend

No more begging for permission slips from financial gatekeepers. DeFi protocols slash transaction costs by cutting out the rent-seeking intermediaries who've been skimming off your profits since forever. Smart contracts execute trades automatically—no human delays, no 'system maintenance' excuses.

Liquidity Without Lords

Algorithmic market makers outperform their centralized counterparts by matching orders peer-to-peer. Your assets never get parked in some exchange's vulnerable hot wallet awaiting bureaucratic approval. The code either executes or it doesn't—no gray areas, no frozen accounts during volatility.

Transparency Triumphs

Every transaction lives on-chain for public audit—try getting that level of visibility from institutions that still run on Excel spreadsheets and whispered phone calls. The old guard can't hide behind 'proprietary algorithms' when open-source code proves its superiority in real-time.

Sure, regulators will keep clutching their pearls about 'consumer protection' while quietly investing in the very protocols they pretend to fear. But when the founder of the world's largest crypto exchange admits decentralization wins? That's not a trend—it's an obituary for centralized control.

The DEX Appeal

The former executive expressed that if he were 20 years younger, he would focus on building both an AI-powered trading agent and a privacy-preserving perpetual DEX, as he sees the biggest opportunities for innovation.

While acknowledging regulatory and liquidity hurdles, particularly in areas like real-world assets (RWA), CZ maintained that the DeFi ecosystem represents the future of finance.

In the second quarter of 2025, DEXs achieved their highest-ever market share in spot trading volumes, according to a report shared by CoinGecko. While CEXs remain dominant, the report highlighted clear signs of weakening momentum. Binance, the largest CEX by market share, still led the field but saw its quarterly spot trading volume decline sharply to $1.47 trillion, down from over $2 trillion previously.

Other major CEXs fared even worse. For instance, Crypto.com endured a whopping 61% drop, and Coinbase also experienced lower volumes, in a wider slowdown across centralized platforms amid growing trader migration to decentralized venues.

The surge in DEX activity was driven largely by PancakeSwap, which emerged as the standout performer of the quarter. The platform’s trading volume grew more than fivefold compared to Q1, which catapulted it to the top of the decentralized exchange rankings. This growth signals increasing trader preference for non-custodial platforms that prioritize privacy, control, and flexibility over centralized infrastructure.

Emergence of Hybrid CeDeFi

A key factor behind the surge in DEX activity is the rise of hybrid CeDeFi platforms, which blend the strengths of centralized and decentralized models. As recently reported by Binance Research, major exchanges are increasingly channeling liquidity toward these systems, which offer users low-slippage trades, MEV protection, and faster execution while retaining the transparency of on-chain settlement.

Binance Research noted that such innovations are making DEXs more scalable and competitive, effectively narrowing the gap with traditional CEXs. Meanwhile, DeFi’s flexible regulatory environment has enabled rapid experimentation and feature rollouts, which have fueled steady growth in on-chain volumes.

The same cannot be said for CEXs whose spot trading remains heavily influenced by retail sentiment, macroeconomic headwinds, and volatility.