You think you are awake right now, isn't it? You argue that this is the waking state. No argument there unless and until you really inquire into your Real Identity. Upon careful inquiry you will come to the conclusion that you are actually not awake. This is the primary dream state or primary illusion state. The 'I am' is the primary illusion or dream state. This illusory state gives one the impression of being, being an entity. This 'I am' latches on to various thoughts and establishes various identities. Thus the confusion of one's True Nature. Yet, it is through this primary dream state that one can establish one's own True Nature and Realize the falseness of this state that one calls the "waking state" and become free.
The dream one gets in sleep is the secondary dream state. Often, the secondary dream results in images and events related to the primary dream state. Then, there is the deep sleep state or dreamless sleep. All these states come and go. YOU(the REAL You) are none of these states. YOU are the one who is AWARE of these states. You remain still and are AWARE of the movement or absence of movement in all these states. Is it not time for you to actually WAKE UP?