An Erosion of Centralized Power: DEX’s Steal Trading Volume & Web Traffic from CEX’s


While Bitcoin ended the quarter 3 of 2020 with positive 18% gains, it was the quarter of decentralized finance (DeFi).

The DeFi explosion also saw Wrapped Bitcoin (WBTC) growing substantially with nearly $1 billion flowing in, representing a 1766% growth.

As per the latest CoinGecko report, more than $9 billion flowed into the crypto space in Q3 alone, with Tether (USDT) accounting for about two-thirds of this total inflow. However, the overall growth of the stablecoin market has slowed down in this quarter.

Capital inflow accelerated as yield farming gained steam

Capital inflow accelerated as yield farming gained steam

As the DeFi hype and yield farming frenzy took over, so did the volume, making it a vibrant quarter for cryptocurrency exchanges.

The total trading volume in the quarter surged 88%, a $155 billion increase, thanks to the month of August when the DeFi mania was at its peak, and many decentralized exchanges (DEX) like Serum and SushiSwap got into the picture.

Towards the end of Q3, the capital flow also appears to be slowing down as yield farming returns got reduced, but it is likely to continue to outperform traditional markets.

The Shift

Centralized exchanges are still very much the ones with the bulk of the trading volume, recording $171 billion in July, followed by $314 billion in August.

However, in the month of September, CEXs volume dropped to $300 billion, while DEXs recorded $30.46 billion, a 700% increase from the previous month. Compared to CEX’s 35% growth, the monthly average DEX trading volume grew by 197% in Q3.

While CEX’s decline was dragged by Coinbase and OKEx, both contributing 60% of the decline in the DeFi space, Uniswap is the leader that contributed 60% to the growth and, combined with Curve, account for 80% of the market share.

This obvious erosion of market share by DEXs could also be seen in web traffic.

In the last month of the quarter, September, the traffic on centralized exchanges took a hit while Uniswap’s almost doubled to become the world’s sixth-largest exchange.

CryptoExchangeWebTraffic

Source: SimilarWeb.com

“This is likely fueled by investor’s appetite to trade on newly created coins, yield farming coins, as well as the subsequent flight towards stablecoins during September’s market dip,” notes the report.

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