DEX Volume Tripled Since January
Report: Decentralized Exchange Usage in 2019
CoinMarketCap predicted that 2019 would be the year that decentralized exchanges started gaining traction. They were right.
Totle recently commissioned D5 — The Data Science DAO —a leading organization of data-scientists who specialize in the decentralized technology space — to conduct an analysis on the state of DEX usage. The report found that the number of transactions traded on DEXs has tripled since the start of 2019 (Figure 1).
Interestingly, the overall amount of transactions executed on DEXs has only grown by roughly 74% since January (Figure 2). In the graph below, you can see that January had around 266,000 transactions and in June that number grew to approximately 426,000; an increase of 240,000 transactions.
Although the price of ETH in June was essentially double the price of January (Figure 3), this factor doesn’t fully explain the recorded growth.
Potential Growth Catalyst One: Improved sentiment towards DEXs
A possible reason for the difference in volume growth versus transaction quantity may be that users are beginning to feel more comfortable with placing larger orders.
Historically, DEXs were assumed to have higher slippage which was a major concern for traders as it could negatively impact trades. After doing our own research on the unique ways that DEXs are preventing slippage, we found that DEX slippage could become far lower than centralized exchanges due to unique system architectures. AirSwap, for example, claims they can eliminate slippage entirely due to their removal of the order book.
Potential Growth Catalyst Two: DeFi growth
Another strong factor that’s supporting this growth is the rise of decentralized financial services. These tools attract users by offering new ways to use cryptocurrency. Some examples include:
Set Protocol — Set provides users access to tokens with built-in automated asset management strategies.
Edge Wallet — Edge enables users to manage cryptocurrency with a familiar and flexible wallet that’s designed for both new and experienced crypto users.
bZx — Also referred to as the box network, is a decentralized margin lending protocol & liquidation oracle marketplace which allows users to long, short, and create leveraged positions.
The core ethos of these products is that they are not bound to a centralized governing body. Because of this, most DeFi services rely on decentralized exchanges for their liquidity. Therefore, as DeFi products grow, so too will DEXs.
The DEXs Facilitating Growth
Roughly 75% of all DEX liquidity comes from permissionless DEXs* (Figure 4).
* In this context, IDEX is a permissioned DEX as they do not allow users to execute trading contracts on their own. This technical hurdle does not allow for atomicity with permissionless exchanges. Permissioned DEXs may also have centralized components that limit transparency in order matching, etc.
Permissionless DEXs such as OasisDEX, Kyber, Uniswap, 0x, Bancor, AirSwap, and EtherDelta fragment the remaining liquidity in the DEX space (Figure 5).
In May and June alone, permissionless DEXs traded a combined volume of
$4-25 Million USD (Figure 6).
Interestingly, Kyber Network and Uniswap alone account for 30% of all DEX volume (Figure 7).
Stay Ahead of the Growth
The DeFi ecosystem is growing fast and it’s bringing with it a wave of new financial instruments that have never been seen before.
Staying on top of it can be tough. New products launch weekly, the DEX delivering best value is always changing, and breaking news about the crypto space seems to pop up at any moment.
Totle can handle a lot of this chaos for you by managing your liquidity. We use a smart-order-routing mechanism to automatically get you the best value on the DEX market for every swap your product makes.
Access Permissionless DEXs Through a Single Source
Totle’s API enables developers to build ERC-20 swap and payment functionality into DeFi services while automatically getting you the best price across DEXs.
We continually connect with new DEXs and add valuable features to make using DEX liquidity as easy as possible. This enables developers who build with Totle to Permanently stay ahead of the DEX economy.
Access the API here to start building with Totle: Totle Documentation
Easily convert tokens while getting best price across DEXs here: Totle Swap