Inside OKX's The State of DEX 2025 Report

Decentralized exchanges (DEXs) are at the heart of crypto’s evolution, driving the democratization of finance with their permissionless and borderless nature.

Recognizing the critical role of DEXs in the decentralized finance (DeFi) ecosystem, OKX has released its much-anticipated “The State of DEXs 2025” report, providing a comprehensive analysis of the challenges, innovations, and trends shaping this space.

This report serves as a roadmap for the future, offering actionable insights to developers, traders, and investors looking to capitalize on the exciting opportunities in the DEX segment.

Cracking the Liquidity Code: How DEXs Balance Risks and Rewards

The State of DEXs 2025 report delves into several critical themes in the DeFi industry. One of the key challenges identified is liquidity bootstrapping.

Liquidity is essential for trade efficiency, as larger pools reduce slippage and ensure price stability during transactions. However, attracting liquidity providers (LPs), especially in a market’s early stages, requires solving the “bootstrap problem.”

LPs face risks like impermanent loss and demand sufficient rewards to justify their participation, while traders seek low fees and deep liquidity. Token holders prioritize long-term value accrual mechanisms such as governance rights or fee-sharing models. This delicate balancing act lies at the core of any DEX’s success.

OKX emphasizes that thoughtful design, clear value propositions, and technical execution are critical to overcoming this challenge. The report highlights successful examples like Solana-based Raydium and Jupiter, the latter commanding 70% of Solana’s aggregator volume, as well as Uniswap v4’s hooks system. These advancements showcase how programmable finance, such as Uniswap’s dynamic fee structures and automated yield optimization, represents the next frontier in market making.

“When we look at these developments collectively—from Jupiter’s routing efficiency to Uniswap’s programmable liquidity—we’re seeing the entire DeFi ecosystem mature into a more sophisticated, interconnected financial system that can potentially rival traditional market structures,” Jason Lau, OKX’s Chief Innovation Officer, shared with BeInCrypto in a recent exclusive interview.

Solana’s Meteoric Rise and Ethereum’s Resilience in the DEX Arena

Furthermore, the report explores the strengths and weaknesses of the two titans in the DEX sector—Ethereum and its so-called “killer,” Solana. OKX’s analysis highlighted Solana’s dramatic rise, where it now dominates over 50% of total DEX volume. Key contributors to this growth include platforms like Jupiter, which handles nearly 70% of Solana’s transaction volume, and Raydium, the leading Solana DEX by liquidity and trading activity.

Solana’s speed, low transaction costs, and retail-focused ecosystem have positioned it as a significant force in the DeFi space. However, questions remain about the sustainability of this dominance. The report points to Solana’s relatively shallow and volatile liquidity pools, rapid total value locked (TVL) rotations, and a heavy reliance on speculative memecoin trading as factors that could challenge its long-term stability.

While acknowledging Solana’s impressive achievements, OKX emphasizes that Ethereum remains the cornerstone of DeFi innovation. This enduring position is attributed to Ethereum’s consistent leadership in liquidity depth, institutional adoption, and whale-size trades.

The report also highlighted Ethereum’s recent advancements, including the Ethereum 2.0 upgrades. By transitioning to Proof-of-Stake and implementing proto-danksharding, Ethereum has significantly reduced transaction fees and improved scalability, making it more appealing for high-value transactions and advanced DeFi applications. Additionally, Ethereum-based innovations like Uniswap v4’s programmable hooks are pushing the boundaries of decentralized market-making, demonstrating the ecosystem’s commitment to technical excellence and sustainable growth.

Scaling, Scrutiny, and Sustainability—What’s Next for Ethereum-Based DEXs?

Yet, Ethereum-based DEXs face notable challenges. The first is the fragmentation of liquidity across its main chain and Layer-2 (L2) solutions. While interoperability protocols provide some relief, they don’t fully address the siloed nature of liquidity pools, which could dilute Ethereum’s dominance if not carefully managed.

Second, while L2 networks were designed to scale Ethereum, they pose a risk of cannibalizing its DEX market share. As users migrate to L2s for their faster and cheaper transactions, Ethereum loses some trading activity to its own scaling solutions. However, OKX takes a nuanced view of this dynamic.

“While L2s are handling an increasing share of lower-value transactions, this shift may actually be beneficial for the overall ecosystem’s efficiency,” Lau noted.

BeInCrypto delved deeper into this finding during an interview with Jason Lau. With the emergence of Layer-3 (L3) solutions—which offer enhanced scalability, interoperability, and customization—could it worsen the cannibalization challenge?

“The emergence of L3 solutions, with their enhanced scalability and customization capabilities, represents a natural evolution of this layered approach. Rather than exacerbating cannibalization, such infrastructure could strengthen Ethereum’s role as the foundational settlement layer and allow even more specific use cases to be deployed. The key lies in viewing the ecosystem as a stack of specialized layers, each serving distinct purposes—Ethereum as the secure base layer, L2s for scaling, and L3s that enhance overall ecosystem functionality,” Lau explained.

Another significant challenge for Ethereum highlighted in the report is its prominence in DeFi, which has made it a prime target for regulatory scrutiny. A notable example is the SEC’s Wells Notice against Uniswap Labs in 2024, which cast a shadow over Uniswap’s future and, by extension, the broader DEX ecosystem.

Given this regulatory backdrop, Lau emphasized the importance of builders taking a step back to reassess the specific problems they aim to solve. He highlighted that constructive collaboration with stakeholders, including regulators and policymakers, is crucial to ensuring their concerns are addressed and reflected. By fostering such dialogue, he believes the industry can continue to build and expand access while encouraging mainstream adoption.

“It might be more pragmatic to focus on a layered architectural approach—splitting out parts like the base protocol that can remain truly decentralized, while adding front-end layers that might need to accommodate different regulatory requirements. This ensures that different layers are solving for specific problems and can be iterated on independently,” Lau added.

Why Derivatives Could Outshine Spot Trading in DeFi Markets’ Future

In the report, OKX also remarked on derivatives as a transformative force in DeFi. This segment is projected to eventually surpass spot trading volumes as the ecosystem matures.

Derivatives offer unique benefits, including leveraged exposure, sophisticated hedging mechanisms, and capital efficiency. These tools cater to speculative traders and those seeking advanced risk management strategies. A notable advantage is their ability to provide market exposure without requiring users to manage the difficulties of holding and transferring assets across chains.

To illustrate this trend, the report highlights Bitcoin’s derivatives trading volume, which significantly outpaces its spot trading volume. Over the past year, the ratio of spot to derivatives trading for Bitcoin has consistently hovered between 0.05 and 0.10, showcasing the dominance of derivatives in market activity.

Although centralized exchanges (CEXs) have already seen derivatives markets take center stage, decentralized derivatives exchanges (DDEXs) still face hurdles. These include liquidity fragmentation, operational complexity, and the challenge of matching the efficiency of their centralized counterparts. However, platforms like Hyperliquid and dYdX are at the forefront of innovation, introducing features such as permissionless market creation and advanced risk management tools to elevate the decentralized derivatives niche.

Crypto X AI is Here to Stay, But There Is a Catch

Lastly, the State of DEXs 2025 report explores the transformative potential of artificial intelligence (AI) agents in decentralized ecosystems, spotlighting their quick rise within the crypto space. The report noted how the intersection of crypto and AI has captured attention with successes like Bittensor and the proliferation of AI-driven innovations, such as Virtuals and Terminal of Truths. These developments have shown how AI agents can engage on-chain, influence narratives, and even fuel market activity through novel concepts like AI meme tokens.

The report further acknowledges that this intersection goes beyond surface-level narratives. It highlights meaningful applications, such as Bittensor’s decentralized marketplace for training and sharing machine learning models, which leverages blockchain infrastructure and tokenized incentive mechanisms. By enabling validators, miners, and users to collaboratively enhance AI models while aligning stakeholder interests, Bittensor exemplifies how crypto can provide strong and unique solutions for the AI domain.

At the same time, the report emphasizes the critical role of blockchains in ensuring on-chain immutability for AI primitives. Platforms like Sentient Foundation are pioneering cryptographic primitives to protect intellectual property, creating new opportunities for open-source AI models. This integration of blockchain’s transparency and security with AI’s potential for growth presents the synergy between the two fields.

OKX also sees opportunities in how AI can advance crypto infrastructure. For instance, platforms like Virtuals, GRIFT, and Polytrader demonstrate AI agents’ ability to facilitate complex transactions, streamline interactions, and improve capital efficiency on-chain.

Despite the promise, OKX warns of significant challenges ahead. Risks such as rogue AI agent behavior and permanent financial losses due to blockchain immutability require careful risk management. Additionally, the decentralized nature of crypto poses hurdles for protecting intellectual property, potentially deterring developers from contributing to open-source AI innovations.

“While we strive to provide users access to these innovations, it’s crucial to recognize that new technologies need time and iteration to develop tangible user benefits and sustainable business models. We’re still in that early phase where careful risk management remains essential as we navigate this evolving landscape,” Lau stressed.

Read OKX’s ‘The State of DEXs 2025’ Full Report Now!

Through The State of DEXs 2025, OKX reaffirms its commitment to advancing decentralized technologies. By tackling key challenges and fostering industry-wide collaboration, OKX envisions a future where DeFi thrives as a secure and accessible financial ecosystem.

To access the full report, visit website

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