I don't expect exchanges to be replaced any time soon:
- Atomic Swaps are very promising, but they aren't used yet (except for some experiments, I know).
- Once it's actually working, each and every altcoin would need to implement it before it can be used. This may or may not be easier than getting listed on an exchange.
- Many traders keep "their" coins on exchanges, without ever installing hundreds of different wallets. To use Atomic Swaps on any altcoin, you'll at least need to install it's wallet, and maybe even download it's complete blockchain. Unless a new wallet service pops up that allows you to do all this from one wallet again.
- This can be safer, as you'll actually own your own private keys and exchanges often get hacked, but many people have lost their coins from their own computer too.
- I'm not an active trader, but in my experience exchanges don't charge much in fees. 0.25% is usually less than the price difference between different exchanges. So it'll depend on the order book which one I'll choose. I welcome competition though!
I think the need to have wallets for each coin is the strongest argument. Maybe an application will really be developed for that.
Also, the need to update the code. I can see a lot of hassle in the communities this would cause.
Would be nice anyway to have a fully implemented atomic swap protocol.