DEXs like Uniswap has carved out a niche, how will 2021 play out?
The year 2020 saw the cryptocurrency market reach new peaks. It also led to the development of decentralized exchanges and provided the opportunity for them to carve out a niche in the previously centralized ecosystem. The torchbearer for the DEXs has been Uniswap, whose growth astounded the whole crypto market.
Even though an increased on-chain volume is expected for DEXs as every trade involves an on-chain transaction, Uniswap was leading among DEXs. The progress of DEXs can be visible in the on-chain ETH flows highlighted below.
Along with decentralized exchanges, the surging market also gave way to stablecoins to flourish in terms of volume. According to a report, the on-chain volume for stablecoins reached a new monthly high in December 2020 of $178.34 billion. This peak suggested a 20% increase from the previous months’ volume.
Whereas compared to the previous high witnessed in September 2020, this was 11.3% or $18.16 billion higher. Tether [USDT] has been an important stable coin whenever BTC rallies and held 71.2% of the stablecoin volume. USD Coin [USDC] and DAI followed with 16.2% and 6.4% respectively.
As Bitcoin and the crypto market continued to rally in 2021, the net inflow of stablecoins to exchanges has been noting a rise every single day, except on 2 January.
The chart above showed the last 6 months of net exchange flow of ERC-20 stablecoins. The exchange witnessing most inflows was Binance as it held $2.307 billion in stablecoin balance. The exchange’s diverse holdings were >$1B in BUSD, >$500M in USDT, >$500M in USDC, plus other stablecoins.
Here, Uniswap took the second spot with $708.656 million. Even though the difference between the first two places is large, it was not occupied by a centralized exchange. Popular centralized exchanges like Huobi, OKEx, Coinbase, and others followed Uniswap with stablecoin balanced under $600 million, at press time.
The decentralized exchanges have gained a large chunk of the on-chain volume along with the stablecoin inflow in this bull market. As we move ahead, 2021 could be an important period for the growth of more decentralized projects.