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The top decentralized exchanges, otherwise known as DEXs, have recorded a whopping 197% increase in average monthly trading volume in the third quarter of 2020.
The Q3 report by crypto market information firm CoinGecko attributes the increase in the trading volume of DEXs to the hype around the decentralized finance (DeFi) market which has seen significant growth this year.
While DEX volume has increased by 197%, the average monthly volume of top centralized exchanges (CEXs) increased by only 35% over the same stretch. The increase in the trading volume on the top DEXs was driven mainly by the month of August during which the DeFi hype was at its peak, and by the launch of new DEXs such as Serum and SushiSwap, the report says. However, CoinGecko notes that centralized exchanges still have the bulk of the trading volume as shown in the figure below.
DeFi Tokens Lead the Market Despite September Pullback
The DeFi market has seen a lot of good days in 2020, peaking in August. The nascent sector has played a critical role in increasing the trading volume of DEXs to 6% of the trading volume of centralized exchanges despite the September pullback that saw many of the tokens retrace, according to the report. The pullback continues today as it was recently reported that top DeFi tokens YFI (yearn.finance), UMA, and UNI (Uniswap) have all suffered a devaluation of over 30% in a period of one week.
The CoinGecko report also notes that Uniswap, Curve, and SushiSwap account for 88% of the trading volume in DEXs. This was majorly facilitated by investors’ interest in the new tokens, as well as the hype for yield farming during the quarter.
Amid price pullbacks in Q3, it will be interesting to see what happens to the DeFi market at the end of Q4. Meanwhile, Ethereum’s gas fees, which were driven through the roof by DeFi hype, are also on a steady decline as the hype continues to decrease. Will the trend continue or it will change soon?
Ponvang Bulus is a cryptocurrency enthusiast, author and investor. He writes about blockchain and cryptocurrency and intends to contribute towards the revolution that this technology is bringing to humankind. He has been active in the industry for over 2 years and intends to stay for a long time.