New Diar Report Explains Why Decentralized Exchange (DEX) Trading Volumes Hit All Time Low
The increase in the number of thefts on centralised crypto exchanges gave rise to the Decentralized Exchanges. With the safety feature in mind, the decentralized crypto economy got the taste of these exchanges that have been considered the future of cryptocurrencies.
However, the current number on these decentralized exchanges are not favourable to their growth or future, at least for now. According to Diar’s latest research, these exchanges have hit an all-time low when it comes to the US dollar traded value along with Ether translation on-chain.
In its previous report, Diar had reported that Ether on-chain volumes hit a new high. In the month of December, last year, Ether on-chain volume has been over 115 million ETH, the highest since its network genesis (excluding the activity following DAO hack in 2016). However, this hasn’t been due to the users on decentralized exchanges.
Since June 2017, when DEX started appearing online “a total of $8.9Bn has been traded on-chain. Last year accounted for the most – just pipping over $7.1Bn.”
However, now the DEX volume has dropped to a new low of $49 million in the month of January, to-date. This is “less than a tenth” of the daily trades of the top cryptocurrency exchange Binance which manages the daily trading volume of $646 million, according to the data provided by Coinmarketcap.
“In terms of Ether, this month is a mere third of what was traded on Ethereum DEXs in January 2018. At peak, over 2.3Mn ETH was traded in May 2018 – now down to 400K.”
Not just the trading volume but unique addresses has also entered a new low. 2017 saw a surge in unique addresses with the highest in December 2017 at 345k from July’s 48k in the same year.
Last year started seeing a drop in activity and in January 2019, the number has been dropped to 67k.
The report further talks about the interest shown by major exchanges towards decentralized exchanges that includes Binance which showed a short demo of its platform and recently shared,
“Binance DEX will support hardware wallets from day one of launch. So that you can be sure your private keys never leave your device.”
Other top exchanges in this list are Coinbase that purchased Paradex last year and Bithumb’s DEX and OKEx’s Open Ledger DEX has been already launched.
But none of these have managed to able to pull in any significant interests from the traders “despite the allure of near low, or no fees at all.” Moreover, the report says it is “unlikely to change” due to the current slow user experience infrastructure that requires the deposit, transaction, and withdrawal gas fees, however, low it might be.