Gas Fees and the Unwavering Preference for Centralized Exchanges

Gas Fees and the Unwavering Preference for Centralized Exchanges

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Before decentralization, centralized exchanges (CEXs) were the only option to buy and sell digital assets. That’s to say that CEXs played a significant role in the adoption of crypto. Interestingly, they remained an essential resource during the 2017 ICO boom when thousands of entities launched their projects.

Not even the hype about decentralized systems seems to petrify these age-old resources. Rightly so, CEXs are here to stay.

Why Centralized Exchanges are Going Nowhere

Centralized exchanges feature a friendly interface as well as native apps. Therefore they are an excellent option for newbie investors and traders. The easy-to-navigate interface makes it easy to open positions in different tokens and digital assets. In addition, the resource supports support fiat-to-crypto on and off-ramps—another newbie-friendly and must-have functionality.

Recall: CEXs were crucial players during the adoption of crypto. Consequently, they’ve got more users than their decentralized counterparts. In addition, higher trading volumes have been reported across centralized exchanges, making them less vulnerable to market manipulation.

The fact that trades aren’t executed on-chain makes CEXs more popular than DEXs. The feature is also responsible for the almost instant settlement across CEXS. Besides, users can enjoy transacting at outrageously low costs. Consequently, traders can stay on top of the game without worrying about related expenses.

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Beyond costs, CEXs are loaded with other beneficial features like crypto derivatives trading, margin trading, margin lending, and exchange staking. Nonetheless, gas fees remain the top reason for the increasing preference for CEXs over DEXs.

Even now, Ethereum’s gas prices are excessively high, and users are reluctant to use DEXs. There are, however, a few platforms that offer low-cost gas trading options. FibSwap is a multichain DEX that allows traders to exchange for almost no money and at breakneck speed. The platform’s purpose is to assemble use of Ethereum 2.0’s increased scalability, decreased gas consumption, and reduced congestion.

Is Gas Really Kicking Users out of Decentralized Exchanges?

The straightforward answer is yes. An increasing number of users are joining the CEXs bandwagon to save themselves plus their wallets from steep transaction costs across DEXs. Remember, gas is a must-have resource for completing any transaction across decentralized systems.

For that reason, seasoned traders and investors often verify these costs before delving into any blockchain platform. Otherwise, gas fees can exceed the traded amount, which eats into a trader’s profits.

The challenge is common across renowned proof-of-work (PoW) blockchains like Ethereum and Bitcoin. The same reason has also contributed to a massive genesis of users from DEXs to CEXS. Further, it’s not a trend that’ll stop any soon. So, CEXs are here to stay.