This month, the Decentralized exchange volume is on the trot to hit $55 billion. It is roughly half of the total volume for all of 2020.
Decentralized exchanges have started 2021 off with a bang. Together, they are on track to surpass the past all-time high volumes as traders take advantage of the rising price of Bitcoin and Ethereum.
Decentralized exchanges like Uniswap and Curve Finance have now transferred more than $27B in transaction volume in January, the second-highest total ever since September 2020’s $29B, crypto data provider Dune Analytics stated – and there are still a few weeks left in January. As of now, decentralized exchanges are on track to process over $55B in trading volume in a single month, close to half of all the volume transacted in 2020.
It seems that decentralized exchanges are all the rage once more after losing the spotlight to Bitcoin’s recent all-time highs.
Decentralized exchanges use smart contracts on blockchain networks like Ethereum to let users swap among digital assets without transferring tokens to an exchange wallet or verifying their identity. Decentralized exchanges, or DEX, boomed in popularity throughout 2020, processing around $120 B in transactions compared to just $3 B in 2019.
Decentralized exchanges and other DeFi trends suggest to stagnate by the end of 2020; volume dropped in both October and November, and rising Bitcoin prices have captured the market’s attention.
Nevertheless, it seems like some of the gains accumulated to crypto holders are going back to the decentralized finance ecosystem, which provided financial services like loans and deposits interest without needing a centralized bank. Loans outstanding on lending services like MakerDAO, Compound, and Aave have increased more than $175M by the beginning of 2021.
“Decentralized exchange deposits and volumes have both been growing in 2021,” DeFi lending protocol Aave founder Stani Kulechov stated. “DeFi is becoming the epicenter of crypto and the trading volumes are starting to reflect that narrative.”
Uniswap is still the most popular DEX, as it has been since March last year, in charge of over 45% of volume in the previous week.
Sushiswap, a Uniswap copycat project that has begun to innovate in its own right, however, has grown its market share remarkably. From capturing less than 2% of aggregate DEX volume by the end of October 2020, Sushiswap is now the second-largest DEX by volume, accounting for over 22% of trade volume in the previous week.
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