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EasyFi Network

Exploring the DEXs for Margins

Deriving value from locked liquidity on Automated Market Makers

With the ever-growing TVL on DeFi protocols across chains, the sustainable yield opportunities are reducing. Most of these yield opportunities on DeFi protocols are done by offering native token incentives which are not sustainable in the long term.

We believe that the longer term DeFi winners will be those protocols who develop and implement a sustainable yield generation methodology alongside incentives for adoption.

The only way is to be able to bring more innovation to the DeFi space by introducing newer financial products and adding utility for the token economy.

On-Chain Margin Trading fueled by liquidity on DEXs will add a big element towards tapping the widespread capital available on the DEXs

Why DEXs for Margin Trade — Issues in CEX trades

  • Trade CEXs, connect the trader to the market via an intermediary
  • The traders’ money is be managed by the custodial services offered by the CEX
  • CEX exchanges are often the top target for hackers to attack
  • In addition, CEXs also have user fraud issues to handle

Why DEXs for Margin Trade — Solving Problems

Margin on DEXs solve some of the following issues:

  • The margin marketplaces offer peer-to-peer & trust-less access to the users and liquidity
  • Assets are non-custodial in nature i.e.; traders’ control & manage their own assets and only deposit them with a smart contract published on the blockchain
  • Every transaction is transparent via smart contracts on the blockchain
  • Access to the Margin trading platform is permissionless

Why DEXs for Margin Trade — Market Snapshots

In an earlier article, Leveraging Money Markets, we had mentioned the overall surging transaction volumes on Decentralized Exchanges to the tune of USD $ 2 Trillion. This is a growth of over 850% YoY as more and more DeFi users seek permissionless and decentralized money markets.

Here are a few facts we garnered from multiple sources that bring to light the HUGE liquidity on DEXs that can be utilized for greater gains by individuals and institutions likewise — using a product such as Margin Trading.

Trade Volume on DEXs

At the time of writing the 24H trade volume on DEXs was over USD $ 2 Billion ($2,182,056,092 on Coingecko) on 281 DEXs with a vast chunk of volumes coming from the top 10 DEXs lead by Uniswap, PancakeSwap and Balancer.

Source: DefiLlama

User Growth on DEXs

The last couple of years have seen a dramatic rise in the number of users who are trading / transacting on DEXs. The numbers used in the below image are overestimates. This unique number is almost 5 Million!

These relate to unique addresses, since a user can have multiple addresses. Source: Dune Analytics

Total Value Locked on DEXs

Total Value Locked is an indicator of the large-scale adoption of any DeFi project by calculating the total value — in USD — of all assets that are locked in the corresponding smart contracts e.g. staking, farming etc. This chart shows the DeFi TVL aggregated per blockchain.

Value Locked per Blockchain. Source: The Block Research

Most Traded Assets

The Top 5 Trading assets on DEXs are Tether, USD Coin, WETH, Wrapped Solana & Wrapped Matic — followed by Binance USD, Cosmos Hub, Ethereum, Wrapped AVAX & Wrapped BNB. The overall trading pairs can be checked on CoinGecko as it keeps changing on a 24 Hr basis.

Most Traded assets on DEXs — Top 5 Marked | Source: CoinGecko

The above data provides us the visibility of the untouched liquidity and the potential with respect to the user growth on DEXs

Endnotes

The DeFi space has surged since 2021, and has grown from just over $20 billion in March 2021 to over $160 billion by this Mar 2022. Now compare this to the rise of the crypto markets to $2.5 trillion from $433 billion over the same period. Despite bearish trends, the optimism remains. The sheer rise in user base and volumes in custodian-less environments — as shown above — shows a live trend of the path money markets are going to take.

Peer-to-peer facilitated trades over an automated market maker engine has been the most sought after option in the past few months. AMMs have played a big role in creating liquidity in the overall DeFi market. It will also draw new and large institutional investors who carry a bigger appetite for risks.

AMMs can hence provide greater market depth and unlock a more diverse set of passive capital and investors.

This is why we believe that AMMs & Lending markets will provide the best combination for large, integrated & scalable businesses and a robust DeFi based money markets.

About EasyFi

EasyFi Network is a universal layer-2 multi-chain money market protocol for digital assets with focus on liquidity sourcing & capital efficiency for structured lending in a non-custodial manner. The Protocol is currently live on Polygon, Binance Smart Chain and Ethereum.

Website | Twitter | Telegram | Whitepaper | Blog | App

To learn more about $EZ and EasyFi, please go through our whitepaper and other articles on this publication. Stay tuned for more news & updates on our Telegram channel and join the official group. You can also follow us on Twitter.

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EasyFi Network

EasyFi Network

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EasyFi is a Layer 2 DeFi Lending Protocol for Digital Assets. Focused on plugging various gaps in DeFi adoption, powered by the efficient Layer 2 Blockchains