- Ethereum-based DeFi activity boomed in quarter three of 2020
- The overall trading volume of DeFi fell in the final month of quarter three despite this
- The user experience of DEXs have improved significantly in recent years
Ethereum News Today – according to a report published by Singaporean crypto metrics platform CoinGecko (on this summer’s crypto market), quarter three of 2020 was the summer of DeFi (Decentralized Finance). The numbers posted during Q3 are eye-catching. There was a huge capital inflow according to CoinGecko. This platform found that the flow of capital into the market increased by a whopping $9.15 billion in Q3.
The platform attributed the spike in capital to DeFi projects. The report all but confirms that DeFi stole the show this quarter after the introduction of yield farming in June. Yield farming is a new method of earning tokens on DeFi projects. They are generally decentralized exchanges, decentralized derivatives platforms, and non-custodial lending projects.
The Rise of Decentralized Exchanges
For those who are not away from the recent activities in the ecosystem, the inflow of Ether-based USD stablecoins (USDT, USDC, DAI, and the Ethereum-based version of Bitcoin, wBTC) soared. Pegs to the USD are useful, particularly when wading through the DeFi space, which is highly volatile. The volume of USDT’s rose by 61%. That of USDC rose by 157%. The volume of DAI rose by 598%, and the volume of wBTC increased by 1,766%.
Users genuinely used DeFi protocols according to CoinGecko. Although the volume on decentralized exchanges (DEX) like Uniswap amounted to only 6% of the volume on centralized exchanges (like Binance), DEX volume rose by 700% in Q3 of 2020. However, the CEO of a decentralized exchange, FTX, Sam Bankman-Fried, described DEX volumes as bullshit. He made the remarks at the beginning of the week because DEX volumes have risen due to profits from yield farming.
The User Experience of DEXs Have Improved Significantly in Recent Years
The DeFi boom saw a massive rise in trading volumes in the so-called DEX (decentralized exchanges). They are non-custodial trading platforms that enable users to transact digital asset peers. The monthly growth of volume on DEX outpaced the monthly volume of growth on centralized exchanges. Additionally, for the top 10 DEX in Q3, the average monthly gain grew by 197%, compared to the 35% notes by centralized exchanges. According to Karan Ambwani, the strategy manager at Conflux Network (a Blockchain protocol):
“The user experience of decentralized exchanges has significantly improved in the past few years due to the influence of the recent incentives given to people to try DEXs. Newcomers in DEX would continue to use them. By doing this they’ll understand the issues with centralized exchanges mode..”