Key Findings

Centralised & Decentralised Exchanges

Key Findings - Centralised Exchanges

The key findings of the latest Exchange Benchmark highlight overall Centralised Exchange performance across 8 key categories of evaluation, providing an assessment into the rankings and highlighting the vital distinction between Top-Tier and Lower-Tier.

Coinbase maintains top ranking

Coinbase has received the highest score in the April 2024 Exchange Benchmark, maintaining the top ranking for the second consecutive Exchange Benchmark. Coinbase notably ranked first in Legal/Regulation and Security sections, which have been revamped and enhanced to ensure the highest level of risk mitigation and accountability.

17 Spot Exchanges reach Top-Tier status, with 4 achieving AA Grade

Out of 98 spot exchanges, 17 met the threshold for a BB+ rating (17%), with only Coinbase and Bitstamp scoring above 80 points. Kraken and Bybit also obtained AA rankings, scoring above 75. Amongst the biggest drivers of top-tier scores were improved Market Quality, new VASP licenses and the uptick in off-exchange settlement offerings being utilised.

10 Derivatives Exchanges reach Top-Tier status

Amongst the 27 exchanges which offer derivatives trading, 10 attained Top-Tier status, with only OKX and Bybit achieving AA grades, with scores of 82.5 and 81.2, respectively. Notably, both scored full marks in Derivatives Market Quality, along with Binance, who were thresholded by their major negative event as a result of their recent CFTC settlement.

Key Findings - Centralised Exchanges

Significant rise in due diligence questionnaire submissions

Exchanges have been significantly more forthcoming with the completion of the Exchange Benchmark Due Diligence Questionnaire, with nearly 50% of Top-Tier Exchanges submitting DDQs across Spot and Derivatives. This reaffirms transparency from the top exchange, and a desire to improve standards in line with an increasingly robust Exchange Benchmark methodology.

VASPnet data shows 68 out of 103 exchanges hold a VASP License, whilst 26 are registered as a Money Service Business

VASPnet data shows that at least 66% of exchanges within the Benchmark hold at least 1 VASP license, with over 95% of Top-Tier being regulated. In contrast, only 60% of the Lower-Tier hold at least 1 VASP license.

Off-Exchange Settlement solutions are on the rise, shifting counterparty risk away from exchanges

Off-Exchange Settlement allows for assets to be mirrored on exchanges and traded natively whilst user funds are held in cold storage with regulated custodians. This measure mitigates exchange counterparty risk almost entirely. Overall, 18 exchanges offer access to this service, with 9 of them achieving Top-Tier status.

Key Findings - Decentralised Exchanges

The key findings of the latest Exchange Benchmark highlight overall Decentralised Exchange performance across 7 key categories of evaluation, providing an assessment into the rankings and highlighting the vital distinction between Top-Tier and Lower-Tier.

Governance participation is declining.

The governance participation on decentralised exchanges has continued to decline in the last 6 months with the average voters per proposal dropping to 577, compared to 647 in the Oct 2023 benchmark and 1,173 in the April 2023 benchmark. Meanwhile, the average number of closed proposals declined to 17.5 proposals from 25.2 in November.

Solana DEXs Surges in User Activity.

Solana-based DEXs stood out in the last 6 months with average daily volumes on the likes of Orca and Raydium increasing as much as 2000%. Owing to the surge in trading volumes and the subsequent rise in liquidity, Orca has climbed the rankings to 8 from 16 last iteration. Raydium has also climbed from rank 32 to 27, yet remains graded at C as it performs in other areas such as user experience, governance and transparency.

Security Concerns Remain Prevalent.

Six DEXs were exploited in the last six months with the reentrancy attack on Kyberswap being the standout with a loss of $54.7mn. In comparison, the number of exploits during the relevant period for the October benchmark was 7, with a larger aggregate hacked amount as a result of the Curve exploit in July.

Key Findings - Decentralised Exchanges

Governance participation is declining.

Solana DEXs Surges in User Activity.

Security Concerns Remain Prevalent.

Key Findings - Decentralised Exchanges

Decentralised exchanges receive updated scores and rankings.

Uniswap received the highest score in the third iteration of our DEX Benchmark, and is the only DEX eligible for an AA rating. Curve came second, securing a BB grade, followed by dYdX and Balancer who secured a BB grade as well.

dYdX leads derivatives exchange rankings.

Among the derivatives exchanges ranked in the DEX Benchmark, dYdX which launched its native chain earlier this year, leads the group, securing a BB grade.

Improvement in overall scores.

While the average score achieved by DEXs improved slightly, having risen to 53.2% from 51.9%, the number of top-tier DEXs has remained at 4 from the last iteration.

Audits Cover Majority of DEX Market.

Although 96% of the DEXs have undergone a smart contract audit, only 15 of them have been audited in the last twelve months. It is recommended for decentralised exchanges to undergo more regular audits in a fast-paced environment such as smart contracts.

Key Findings - Decentralised Exchanges

Decentralised exchanges receive updated scores and rankings.

The average score achieved by DEXs improved slightly, having risen to 53.2% from 51.9%, the number of top-tier DEXs has remained at 4 from the last iteration.

Solana DEXs Surges in User Activity.

Security Concerns Remain Prevalent.