Token Terminal: Inventory and Trend Analysis of Recent Key Data on DEX

Token Terminal: Analysis of Recent Data and Trends on DEX

This article is Token Terminal’s latest weekly fundamental news communication, focusing on exchanges. The content covers an overview of the DEX market, how trading volume is shifting from Ethereum to other chains, case studies of Uniswap, PancakeSwap, and Trader Joe, and the best performing DEXs.

Market Overview: Over the past 180 days, the overall trading volume of DEX has remained stable, with a peak on March 11th reaching 16.2 billion US dollars during the USDC decoupling period (March 9th to 12th), which is more than eight times the daily average of 2 billion US dollars in the past 180 days. At the same time, during the decoupling period, DEX TVL dropped by nearly 15%, and the USDC-WETH liquidity pool on Uniswap dropped from 450 million US dollars to 300 million US dollars within three days. Afterwards, TVL returned to the previous level by the end of March.

DEX trading volume is shifting to chains outside of Ethereum: Since early 2023, Ethereum’s share of total DEX trading volume has dropped from 72% to 54%, while Arbitrum’s share has grown from 3.3% to 23.3% during the same period. The ARB token is the main driving force behind this growth. On the day ARB was launched on March 23rd, the trading volume on Uniswap alone exceeded 480 million US dollars. Although it has since declined, it is still the second largest chain after Ethereum. The increasing demand for token trading on Arbitrum has also led to the launch of new DEXs. Camelot has facilitated nearly 1 million transactions in the past 90 days and is now the second largest DEX on Arbitrum after Uniswap.

Well-known DEXs expanding to native chains: Uniswap and Trader Joe have both successfully expanded to their native chains, with about 40% of their trading volume coming from chains other than Ethereum and Avalanche. Uniswap’s growth mainly comes from new traders on Polygon and Arbitrum, while Trader Joe has also captured users who make larger trades by expanding to Arbitrum. In contrast, BlockingncakeSwap has been struggling outside of the BNB Chain, with only 0.5% of its daily active users coming from Ethereum and its trading volume accounting for only 4.2% of the total trading volume.

Trends: Over the past 180 days, the projects with the highest growth in trading volume are Trader Joe at 237.2%, KyberSwap at 91.8%, Quickswap at 61.8%, and BlockingraSwap at 38.6%. The number of daily active users on Trader Joe has doubled, mainly due to its expansion to Arbitrum and the release of liquidity book solutions v2.0 and v2.1, which improved token pricing and reduced slippage. We expect future DEX development to focus on improving pricing, reducing slippage, and customizing fee tiers. We can see examples of this trend in Uniswap v4, which introduces customizable liquidity pools through Hooks.

Other highlights: 1) After discovering and fixing vulnerabilities, KyberSwap relaunched the Elastic contract. 2) Due to the expiration of the Uniswap v3 license, centralized liquidity solutions can be adopted more quickly. 3) Velodrome has launched v2, which provides updated user experiences, supports custom pool fees, single token liquidity positions, and an upgraded voting mechanism.

Reference: https://tokenterminal.com/weekly-fundamentals/exchanges-dex-69