With the growth of DeFi in 2019, we’ve seen the re-emergence of decentralized exchanges (DEXs) as one of the vital pieces for autonomous liquidity on the backend of many of our favorite applications. Synthetix heavily relies on Uniswap, MakerDAO on Oasis, and dozens of wallets like Argent, have integrated Kyber as their back-end liquidity protocol.
Since this fall, Uniswap and Kyber have grown to dominate the DEX market, comprising over 50% of all DEX volume between just those two protocols. MakerDAO’s Oasis and 0x have also carved out a substantial niche within the market while IDEX – an exchange from the 2017/2018 – still has a fair amount of trading volume with respect to the rest of the field.
Data via Dune Analytics
Average weekly trading volumes between Kyber and Uniswap are nearing $20M per week, with Kyber leading the market at around $18.4M in weekly volume. IDEX trades around $17.6M followed by MakerDAO’s Oasis with $16M.
It’s interesting to see that IDEX is still able to garner this amount of trading volume despite having launched in the midst of the ICO bubble. Moreover, it’s interesting to see that Oasis is still up to par with the rest of the DEXs in terms of volume despite the limited trading pairs. For those unfamiliar, Oasis only trades Dai and Sai based pairs for a small handful of crypto assets, including ZRX, BAT, REP, WETH, and USDC.
Data via Dune Analytics
0x is the last major DEX left, boasting an average of $12.4M in weekly volumes. While this is a respectable amount of volume, the 0x data includes all major DEXs integrated with 0x’s liquidity protocol including Radar Relay, Paradex and Open Relay.
With that, we’ve also seen ConsenSys’ Airswap continue to muster up nearly $1M in average weekly trading volume. As one of the more prominent ICOs in 2017, AirSwap was one of the first DEXs to facilitate a fully compliant security token transfer. We’ve now seen this done with Uniswap and others as RealT tokenized properties now have liquidity pools for a verified whitelist of investors. The last DEX displayed above – OpenSea – is an exchange for trading NFTs and other digital collectables with over $400,000 in average weekly volume.
Data via Dune Analytics
The above graph takes into account the average weekly volume in August and September and compares it to the average weekly volumes across December and January. We believe this methodology gives a more encompassing view on the growth of these exchanges rather than strictly looking at growth in the first week (August 12th) and comparing it to the last week in our data set (January 20th).
Despite having relatively low volume compared to the rest of the DEXs, OpenSea was one of the highest growing DEXs, boasting nearly 45% growth since the end of the summer. Non-fungible tokens continue to garner a growing amount of traction within the DeFi community as digital art and gaming collectibles from Gods Unchained, Axie Infinity and others find their niche.
Outside of OpenSea’s substantial growth, Uniswap and Kyber saw the highest amount of growth over the past 6 months. Uniswap led the pack, surging nearly 150%. This comes as no surprise as liquidity within the DEX (i.e. value locked) reached all-time highs on multiple occasions with the exchange recently nearing $50M in total liquidity across thousands of token exchanges.
Source: DeFi Pulse
While Uniswap saw the largest amount of growth, Kyber’s DEX volume also grew by ~90%. According to the most recent ecosystem report, nearly 7,000 unique addresses traded through Kyber in the month of December, reporting over $40M in monthly USD volume.
Kyber continues to lead in terms of integrations across wallets, DeFi protocols, and other applications. To highlight some prominent integrations, KyberSwap, Nuo Network, Argent, and Fulcrum all leverage Kyber’s liquidity protocol for their applications.
Source: Kyber Ecosystem Report #10
Kyber is set for an exciting year with the upcoming Katalyst token rework, effectively streamlining incentives as well as transitioning towards a DAO to maximize the value of the KNC token. If you’re keen on learning more about the upcoming Katalyst rework, feel free to refer to our write-up here.
DEX Liquidity Aggregation Intensifies
We’ve also seen a growing amount of interest from the DeFi community with liquidity aggregators such as 1inch, DEX.AG and more recently, the launch of 0x API.
0x API enables developers to easily access both off-chain and on-chain liquidity from major DEXs including 0x Mesh, Kyber, Uniswap, and Oasis. Many of the leading DeFi projects have already begun integrating with the 0x API including: Nuo Network, Zerion, bZx, DeFi Saver and others. With that, 0x is the first to have both a liquidity aggregator and a DEX under a single ecosystem.
Despite the big announcement, 0x API isn’t the first to market. The leading DEX liquidity aggregator, 1inch, has seen strong growth within the past few months. 1inch leverages multiple DEXs, including Oasis, 0x relays, Kyber, Uniswap, Bancor and others to easily bring users the best prices with low slippage across a variety of exchanges.
Source: The Defiant
The DEX market is beginning to heat up as competition over trading volume intensifies. However, with the recent emergence of liquidity aggregators, major DEXs will all receive their fair share of volume as traders continue to opt-in towards leveraging aggregators to receive the best prices with low slippage.
One of the more interesting aspects from this article is the emergence of OpenSea and other NFT-based exchanges. With a multitude of well-designed crypto games beginning to launch on Ethereum, the surrounding trading market for their respective in-game assets will begin to form.
Lastly, while 0x has struggled to garner any significant growth within recent months, the ZRX economics rework along with the launch of 0x API should boost their trading volumes due to the increased liquidity and capitalizing on the growth of DEX liquidity aggregators.
In the coming months, we may expect the liquidity aggregator market to heat up along with the leading DEXs, Uniswap and Kyber, to continue to on their growth paths.
Analyst at Bankless – one of the leading resources for open finance. Lucas is an active contributor to the DeFi ecosystem with appearances in other notable DeFi outlets including The Defiant and Our Network. He has years of experience working with dozens blockchain and token startups where he focused on token economics, marketing, and growth.