Q3 DeFi boom pushes DEX volumes up by 700% from $3.8B to $30.4B

Asia Blockchain Review

October 23, 2020

CoinGecko, the world’s leading independent cryptocurrency aggregator, has just released its 2020 Q3 Cryptocurrency Report. In their analysis of the market, CoinGecko found that the DeFi boom pushed decentralized exchanges (DEX) volumes up by 700% from $3.8 billion to $30.4 billion. In addition to DeFi, there was also a lot of interest in yield farming which is quickly gaining in popularity among crypto users. 

Due to the growing popularity of both DeFi and yield farming, there was also a $155 billion increase (+88%) in total trading volume during Q3. While centralized exchanges (CEX) still have the bulk of trading volume, CoinGecko found an obvious erosion of market share by DEXs which have been rapidly gaining traction within the space. 

In Q3, DEX volume trading grew by 197% on average which outperformed CEX that saw a marginal growth of just 35%. However, DEX volume stood at 6% of CEX, indicating that there is still much room to grow. 

Other Highlights 

  • Capital inflow of $9B following Yield Farming craze, USDT leads with $6B, and over $1B BTC is now on Ethereum Chain

During Q3 2020, the Ethereum (ETH) blockchain saw what is probably the largest capital inflow since its inception. This surge in capital inflow is likely due to investors seeking to capitalize on yield-farming opportunities that would provide lucrative returns. As a result, an impressive $9 billion flowed into the space during the quarter. 

As yield farming popularity continued to surge in Q3, so did the market cap of Tether (USDT), USD Coin (USDC), DAI, and Wrapped Bitcoin (WBTC) which represents the capital inflow. USDT accounted for nearly two-thirds of the total inflow with $6 billion

added while WBTC experienced an explosive growth of 1766% with nearly $1 billion flowing in. 

Towards the end of Q3 2020, CoinGecko reports that capital inflow began to slow down slightly due to reduced yield farming returns. However, it is likely to continue as long as the returns continue to outperform traditional markets. 

  • Market Capitalization continued to grow in Q3 by 31% (+$75b) amidst September uncertainties

The crypto markets also experienced positive growth of 31% in market capitalization as well as 34% in trading volume. These numbers illustrate market recovery in trading volume when compared to the March Black Thursday in Q2 which caused users to be fearful and cautious. Unfortunately, findings from CoinGecko’s data seem to suggest that the crypto markets struggled to maintain the July – August mini bull run owing to uncertainties arising from the COVID-19 pandemic developments worldwide, as well as U.S. elections. 

  • Uniswap continues to dominate the DEX market by 67% as DeFi takes off

Throughout the Q3 period, decentralized exchanges Uniswap and Curve maintained their positions as the dominant trading avenues. In fact, the two platforms accounted for 80% of the DEX market share by the end of Q3 this year. However, CoinGecko is also keeping their eyes on a new contender. Sushiswap, which is actually a fork of Uniswap, managed to grab up to 8% of the market share in September. While it is too early to say for sure, Sushiswap could pose a challenge if it continues to innovate and attract traders and liquidity providers alike.

DEX volume growth far outpaced CEX. CEX volume shrank in September Image 2: DEX’s trading volume grew (explosively) while CEX’s shrank 

Capital inflow of $9B following Yield Farming craze, USDT leads with $6B, and over $1B BTC is now on Ethereum Chain 

Market Capitalization continued to grow in Q3 by 31% (+$75b) amidst September uncertainties 

Uniswap continues to dominate the DEX market by 67% as DeFi takes off Image 1

About CoinGecko 

CoinGecko is the world’s leading independent cryptocurrency aggregator. Since 2014, it has been the trusted source of information for millions of cryptocurrency investors. Its mission is to empower the cryptocurrency community with a 360-degree overview of the market. CoinGecko provides comprehensive information derived from thousands of data points such as price, trading volume, market capitalization, developer strength, community statistics, and more. It currently tracks more than 7,000 tokens from more than 400 exchanges. 

For more information, visit https://www.coingecko.com

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