The rise of decentralized finance (DeFi) platforms has significantly impacted traditional cryptocurrency exchanges. DeFi offers trustless, permissionless trading via smart contracts, reducing reliance on centralized intermediaries. This shift challenges exchanges' monopoly on liquidity and trading volume, as DeFi protocols like Uniswap enable direct peer-to-peer swaps with competitive fees. Traditional exchanges face pressure to lower costs, enhance transparency, and integrate DeFi features like yield farming or staking to remain competitive. However, centralized exchanges still dominate due to user familiarity, regulatory compliance, and faster transaction speeds. The coexistence of both systems is driving innovation, but DeFi's growth threatens to erode the market share of traditional platforms over time.

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