This report provides an in-depth analysis of the Decentralized Exchange (DEX) market, examining its historical performance, current trends, and future potential. It highlights the recovery of the crypto industry post-Terra crash, with a special focus on DEX’s role in this resurgence.
The crypto industry has successfully regained the momentum it had lost post-Terra crash in the previous year. Further, investors have now shown a rising interest in the DeFi ecosystem due to its unique nature as a financial payment system.
On the other hand, the DEX ecosystem has started to gain major traction as the market is now diverting its attention toward it. Further, the DEX tokens are predicted to play a major role in the upcoming Bull cycle due to their rising security, scalability, and ability to problem-solve most economically.
DEX Performance History:
Over the years, the DEX market has gained significant traction as it has attracted a large number of investors. Further, the year, 2021 was considered the year of DeFi as it recorded multiple folds in value. The industry had recorded a peak during May, after which the industry experienced a catastrophic crash in the following months.
Following this, the market took months to recover from its losses as major tokens had wiped out over 90% in valuation within days. 2022 was a stable year for DEX as it displayed constant fluctuations in value.
2023 started positively as the category displayed a constant rise in value due to the market pump. As the bullish momentum settled down, the DEX recorded a significant decline in value.
The DEX has recorded a trading volume of $835 Billion this year, highlighting the increasing adoption of investors on this network. The DEX is set to revolutionize the financial system with its unique properties in the coming future.
Exploring DEX Market:
The DEX has revolutionized the way we think about our financial system. The Automated Market Maker (AMM) is one such example. It plays an important role in the industry as it allows buyers and sellers to create and match orders.
AMM relies on an algorithm price determination and the liquidity pools. The AMM DEXs are user-friendly. They have made the Decentralized financial system more accessible by offering innovative solutions and making the adoption easy.
Order Book is also considered the backbone of P2P trading as it is designed to support (Peer-2-Peer) P2P trading. Its main purpose is to record all open transactions involving the buying and selling of a particular asset.
It allows a trader to place an order to buy or sell cryptocurrency tokens at a particular price. Further, it matches the buy and sell order automatically, this makes a complete marketplace for trading crypto tokens.
DEX Market Share:
The popularity of the DEX market is on a constant rise as investors are steadily adopting this unique transaction method. The DEX market is still recovering from its losses from the 2021 market crash. Moreover, the market displayed a positive start to the year as it recorded a constant rise in the charts.
Uniswap continues to dominate the DEX market in terms of volume as it accounts for 55.7% of the total volume traded on the platform this year. Launched in the year 2018, it allows its users to swap any ERC-20 token instantly.
Followed by Uniswap, PancakeSwap has the second-highest share with a dominance of 15.1% and an all-time value of just over $631 Billion. PancakeSwap quickly picked up pace with its unique features and gained significant market attention, resulting in it gaining popularity.
Trader Joe’s stands third with a dominance of 8% and Curve is fourth with a total of 7.7%. Other chains such as Balancer, Sushiswap, 1Inch, Maverick, and other chains account for a total of 13.5% of the market.
The top four tokens which are Uniswap, PancakeSwap, Trader Joe, and Curve account for a total of 86.5% of the total DEX market, creating their dominance over this unique financial system.
Ethereum continues to dominate the market as it accounts for most of the transactions. Uniswap was the first Ethereum-based DEX that enabled the swapping.
Following the market surge the transactions recorded a notable spike in the chart. Currently, the Total Value Locked (TVL) stands above $4 Billion for this chain, indicating the growing dominance in the market.
Top DEX Chains:
The increasing DEX also means failure in the Centralized Exchange (CEX). Over the past year, the dominance of DEX has recorded significant growth in the market, highlighting the rising interest of investors in it.
Further, the DEX is destined to hold a massive share of the market soon as the regulations crises in the crypto industry are on the rise.
The category leader, Ethereum had a remarkable run during the previous year as it had recorded a top of $38 Billion in a week during May. Further, the chain has displayed a decent 2023 as it has witnessed stable growth.
The chain recorded a massive jump during March as it recorded over $38 Billion worth of transactions within the first week. It achieved this mark for the first time since the market crash it had witnessed the previous year.
The prime reason for the pump was reasoned to be Ethereum’s latest major update “The Shanghai Update”.
The Tron chain had a stable 2023 as it recorded minor fluctuations during the whole year.
The chain recorded its high of $200 Million in the first month of the year, after which the chain managed to cross the $150 Million mark only once during the whole year. This indicates a decline in the interest of the users in it.
The chain constantly recorded low transactions till October, indicating a decreased interest in the users for this network. Further, it witnessed significant volatility during Q3 as the market displayed a massive jump in its valuation.
The activity on the chain records a constant rise, with a top of approximately $4 Billion within a single week during December. The rising interest of users highlights a high potential for this chain in the coming time.
Binance Smart Chain
The BSC has displayed a neutral year of trading in 2023. The chain continues its struggle to regain the momentum it once had in the market. The BNB Smart Chain had a tough year as the Layer 1 crypto, the Binance coin faced multiple setbacks.
BSC had a remarkable 2021 as it recorded a top of $25 Billion within a week. Following the Terra crash, the BSC lost momentum and has been struggling since as the chain is now less preferred compared to its competitors who have swept the market by the whole.
The Arbitrum has gained massive attention, resulting in it holding a place in the top chains of all time. 2023 has been a volatile year for the ARB chain as it has displayed significant volatility.
The Arbitrum chain picked up pace following its airdrop in March. Since then, the chain has been in constant discussion among the users. Further, the ARB recorded a top of roughly $5.5 Billion post-airdrop, making it the highest weekly transaction on the chain.
The DEX category is in an early stage and is set to play a major role in the industry in the coming years due to its unique nature of working. The Decentralized Exchange breaks the barrier of the traditional financial system and allows its users to access new and unique transaction methods.
Moreover, it is secure and user-friendly which makes it preferable to the users. The rising crypto regulations and exchange collapses on the CEX also boost the use of the DEX exchange as is non-custodial, resulting in more investors and users adopting this alternative.