Saturday, May 28, 2022

DEXs come to the rescue after China bans crypto


Over the previous few months, there have been some main developments popping out of China which have rocked the cryptocurrency market and the worldwide monetary markets. China’s Evergrande debt repayment crisis despatched shockwaves all through world equities markets, in addition to the US Securities and Trade Fee’s (SEC’s) consistent signaling of upcoming regulation for stablecoins and decentralized finance (DeFi) continued to weigh on sentiment throughout the market. 

Whereas the Evergrande scenario considerably resolved itself, in the interim, the federal government crackdown on unregulated DeFi platforms and stablecoin transactions continues. This has resulted in cross-chain outfitted layer-one protocols and layer-two options seeing elevated volumes as merchants seek for non-centralized venues to work together with.

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In line with CryptoQuant CEO Ki Younger Ju, after China introduced a ban on all cryptocurrency transactions, main cryptocurrency exchanges like Huobi suspended companies for accounts in mainland China.

This triggered an exodus of funds from Asia-based centralized exchanges (CEXs), and these funds had been ultimately deposited onto decentralized exchanges (DEXs) and the broader decentralized finance (DeFi) ecosystem.

This phenomenon is especially attention-grabbing and requires additional investigation, given the assumed failure of Ethereum’s London laborious fork in addressing untenable gasoline charges and the regulatory considerations mounting over the U.S. and China’s response to cryptocurrencies.

Let’s check out a number of the current thriving DEXs and standard protocols which can be seeing a rise in inflows.

The Ethereum community

The Ethereum community is by far essentially the most dominant sensible contract and it hosts the biggest and most used decentralized exchanges like Uniswap (UNI) and SushiSwap (SUSHI), in keeping with knowledge from Dune Analytics.

Month-to-month DEX quantity. Supply: Dune Analytics

Whereas the newest cryptocurrency ban out of China dominated headlines within the final two weeks of September, the announcement was originally made on Sept. 3, across the similar time that exercise on Uniswap surged larger.

Uniswap buying and selling quantity vs. complete income. Supply: Token Terminal

As proven within the graph above, the spike in Uniswap’s exercise and buying and selling quantity really started on Aug. 28 and remained elevated above its earlier common for the following couple of weeks.

Uniswap has additionally benefited from its current integrations with the newly launched layer-two solutions Optimism and Arbitrum, which helped to decrease the transaction prices and velocity up affirmation instances for customers on the community.

The Fantom community

The Fantom protocol has risen in prominence in current months due to the launch of a bridge to the Ethereum community and a 370 million FTM developer incentive program designed to draw new tasks to the Fantom ecosystem.

Information from Token Terminal reveals that whereas the announcement of the motivation program on Aug. 30 offered an preliminary enhance in protocol income and token value, it wasn’t till after the regulatory announcement from China on Sept. 3 that exercise and protocol income actually skilled a sustained improve.

Fantom value vs. protocol income. Supply: Token Terminal

Fantom makes use of a directed acyclic graph structure that permits a excessive throughput functionality for near-zero charges, which has helped the protocol develop in reputation amongst DeFi and NFT merchants who had been priced out of conducting transactions on Ethereum.

SpookSwap and SpiritSwap are the 2 prime DEXs on the Fantom community and collectively presently deal with a mean of $95 million in 24-hour buying and selling quantity.


The Avalanche community is a blockchain protocol that has been gaining traction since its mid-August launch of the Avalanche Rush liquidity mining incentive program, which incorporates greater than $180 million price of rewards and incentives designed to draw liquidity to the DeFi ecosystem on Avalanche.

Avalanche value vs. protocol income. Supply: Token Terminal

For the reason that launch of the motivation program in mid-August, the protocol income and token worth for the native token AVAX have been on the rise as customers transferred property across-chain to have interaction in Avalanche’s rising DeFi ecosystem.

In line with knowledge from DefiLlama, the highest DEXs on Avalanche are Dealer Joe (JOE) and Pangolin (PNG), which mixed presently see a mean 24-hour buying and selling quantity of $355.2 million.

Decentralized perpetuals buying and selling

Decentralized perpetuals buying and selling protocol dYdX, which has exploded in reputation in September following the airdrop of its native DYDX token, has additionally seen an uptick in person exercise and volumes.

In line with knowledge from Token Terminal, the each day buying and selling quantity on the alternate exploded within the remaining days of September, surging from a mean beneath $2.1 billion to greater than $9 billion on Sept. 27.

Whole worth locked on dYdX vs. buying and selling quantity. Supply: Token Terminal

The regulatory crackdown has been particularly laborious on spinoff and leveraged cryptocurrency exchanges like BitMEX and Binance, resulting in a rise in demand for decentralized choices like dYdX and Hegic.

Whereas many throughout the cryptocurrency ecosystem lamented China’s crackdown on the crypto sector, their heavy-handedness could have really turned out to be a blessing in disguise. It prompted merchants to enterprise away from centralized exchanges and out into the quickly increasing DeFi ecosystem the place the ethos of decentralization and the power to “be your individual financial institution” continues to be out there to those that search it.

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The views and opinions expressed listed below are solely these of the creator and don’t essentially mirror the views of Each funding and buying and selling transfer includes threat, it is best to conduct your individual analysis when making a call.