Decentralized trading platforms explode in January 2021, setting a new record trading volume - FOGWHY

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Sunday, February 7, 2021

Decentralized trading platforms explode in January 2021, setting a new record trading volume


 

In previous articles on Bitcoin Arabs, we have previously reported the increase in volume and competition between decentralized trading platforms.


And the volume is still increasing month by month.


As it is known, decentralized trading platforms differ from central trading platforms in that they do not have any central entity to run them and rely on a set of smart contracts as an alternative to the central process.


Most of the decentralized trading platforms rely on the Ethereum blockchain in their operation, which makes them slow and ineffective in terms of fees.


But traders gladly embrace this temporary problem because they enjoy other perks, such as that they do not need to comply with KYC requirements and not be subject to the regulations and other rules imposed on centralized trading platforms.


Decentralized trading platforms are booming:

The number of decentralized trading platforms increased, and so did the activity on each of these new platforms.


According to statistics and figures provided by the "Dune Analytics" platform, in January 2021, the volume of trading in the decentralized trading platforms exceeded the barrier of $ 63 billion for the first time ever.


This number is more than double what was recorded in September 2020, when trading volume in the DEXs came close to touching $ 30 billion.




This happened at the height of the DeFi decentralized finance boom.


According to “Dune Analytics” statistics, the “Uniswap” decentralized trading platform is the undisputed leader in the sector, with more than $ 25.8 billion in circulation in August 2020.


This figure somewhat contrasts with research by "The Block," which estimated that more than $ 30 billion was transferred in that month.




According to "The Block" website, the record for trading volume on the "Uniswap" platform reached $ 60.9 billion.


As for the platforms that occupied the following positions, they are "SushiSwap", "0x" and "Bancor".


The “Sushiswap” platform controls nearly a quarter of the trading volume in the decentralized trading platforms, and the “0x” owns 7.25% and the “Bancor” the 7.1%.


The “Dune Analytics” dataset does not take into account the statistics taken from the popular trading platform “1inch” whose volume has increased by more than 1000%.


The statistics platform did not reveal the reasons for this neglect of the “1inch” platform.


However, this is likely due to the short operating time of the platform.


Decrease in Bitcoin Volume in Trading Platforms:

Another aspect worth considering is that the supply of Bitcoin on the central trading platforms has fallen to an all-time low and has not been reached in the past two and a half years.


The data collected by Glassnode shows an almost inverse relationship between the evolution of the Bitcoin price and the number of Bitcoins stored in the trading platforms.




Glassnode shows that from April 2020 until now, the central trading platforms have seen Bitcoin stock drop by nearly 3 million Bitcoins to less than 2.4 million Bitcoin.


This drop coincides perfectly with the initial recovery that Bitcoin made after the market crash in March 2020, which began to move in an uptrend to an all-time high above $ 40,000.


One reason for this decline may be that higher prices caused the effect of greed among traders, who refused to sell in anticipation that their bitcoin would rise more and more over time.


The role of investment institutions that buy large amounts of Bitcoin to store for long periods of time cannot be overlooked here.


All this bitcoin shortage in the markets raises prices to rebalance the trading books.

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