Abstract
Cryptocurrencies trade on two types of exchanges – centralized and decentralized. Although trading of the largest tokens predominantly occurs in centralized exchanges, the overwhelming majority of tokens will never be listed. We examine 1,123 tokens traded in decentralized markets and show significant differences in listing and trading characteristics from their centralized counterparts. Decentralized exchanges attract emerging projects and facilitate immediate secondary trading. A small number of these will achieve a centralized listing, resulting in an increase in total trading activity and a migration of volume to the centralized exchange. This migration defies the important benefits of decentralized exchanges, such as reduced counterparty default risk and more diverse trading pairs, suggesting that centralized exchanges play important certification roles in this new market.
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