Centralized and Decentralized Exchanges Outlook in 2022
Written by EmergentX Insights team
February 20, 2022 | 1 Min
Highlights
- In 2022, CEX and DEX will take pages out of each other’s playbooks to better position
themselves to capitalize on the massive upside potential of digital assets. - Regulation will be the top-of-mind issue for centralized exchanges as different
jurisdictions continue to tighten. 2022 will be a year of horizontal and vertical
integration for CEX. - Derivatives and structured products will see significant developments in 2022 for
investors to access higher yields.
Core thesis
Institutional and retail adoption is heavily dependent on the performance of centralized and
decentralized exchanges, as the former is often the entry point into the digital asset
ecosystem. Regulation, security and standards are top-of-mind issues for centralized
exchange.
Significance and Disruptive Impacts
Centralized exchanges are dominant (and remain so in the near term), and decentralized
exchanges are more efficient. Both camps will take pages out of each other’s playbooks to
increase the competitiveness of their offering.
Expectation for 2022
- A symbiotic relationship between centralized and decentralized exchanges
CEX and DEX will coexist, drawing from the synergies of the respective value they
bring and the massive upside potential of the digital asset market. Longer-term,
infrastructure improvement and integration with decentralized protocols will be the
differentiators of CEX. - Path to greater product diversity, transparency and liquidity
Exchanges will introduce more diverse products insofar as permitted by regulations
to stay competitive and meet client demand. - Centralized exchanges expand horizontally and vertically
CEX are entering adjacencies such as NFT and DeFi, and the industry is undergoing
consolidation with M&A and partnerships. - Strong growth in the derivatives market
Derivatives on DeFi and structured products will see significant developments in 2022 for
investors to access higher yield.
EmergentX Digital Asset 2022 Outlook
Year of Consilience
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