DEXs are where the bulk of on-chain trading actually happens. CEX volumes are still larger in absolute terms but the growth trajectory is clear — every cycle, DEX market share increases, and the gap between what you can trade on-chain versus on a centralised exchange continues to shrink.
The sector is a bet on that growth. If DEXs continue taking market share from CEXs, protocol tokens that capture a share of fees will grow with them. If not — if regulatory changes push activity back to centralised venues — the sector underperforms.
For deeper context see the DeFi sector, the Uniswap glossary entry, and our what is Ethereum guide. Data below is live from CoinGecko.