DEX volume is decreased due to the investors’s transtion from Defi to Bitcoin?
DEX trading volume is decreased continuously and the price of Defi token is going down.
This reality shows that the investors are coming back to Bitcoin. Bitcoin is attracting most traffic when it continue to reach to high price in 2020. While Defi trending if losing attention, specially when the Defi token’s pricing just keep on going deep down.
The statistic shows that the trading volume on the decentralized exchanges, a typical example is the DEX, is declining rapidly and continues to signal a decline in the DeFi sector. The lost of Harvest Finance caused by the hacker leads to a explosion of trading volume in the same day, especially on Uniswap and Curve.
According to the reports by media channels and Harvest investors, a hacker had proceed a quick borrowing exploitation for an amount of cryptocurrency valued million dollars on both Uniswap and Curve aims to reduces the perceived price of Tether (USDT) and USD Coin (USDC) tokens on Harvest Finance. After that, the hacker bought those tokens at a discount, used them to pay for the initial loan and earn a small profits from this process. By re-setting this process several times, the Uniswap’s volume has increased. Even though the attack made the DEX volume increased to 5 billion dollars in that day, anomaly has existed for a moment and since then, the volume seems to be steadily decreasing.
How will DEX effect on Defi?
In the last 2 weeks of October, DEX has been in the worst period of trading volume since August. The weekly volume has decreased from 8 billion dollars to about 3 billion dollars from Oct 19 to Oct 25. Uniswap is still leading the market with 56% of total DEX trading volume. Despite of the big refinement on Defi assets and the decrease in trading volume, the total locked value is still in near a record high. The statistic from Defi Pulse shows that the current total locked value is 11,2 billion dollars, just slightly down from an all-time high reached on October 25 of $ 12.46 billion.
Can DEX exist?
Before investors shift their focus back to Bitcoin, some traders are wondering what will happen to the decentralized asset. The total value locked in DeFi remains high, but this could change soon due to the declining trading volume on exchanges. Decreased DEX volume as DeFi investors are switching to Bitcoin? Much of the reward on DeFi protocols is linked to trading volume which results in lower volume resulting in lower yields for liquidity providers and less investor interest in DeFi. According to Ilya Abugov, principal analyst at DappRadar:
“There has been a bit of drop since the end of the summer, but I think that’s natural. Periodic hype beyond real growth entails a period of rest. However, from a fundamental perspective, nothing spoiled the growth of DeFi and DEX. New projects are still under development ”.
DeFi interest remains if the right project emerges Despite facing many challenges, a number of DeFi projects continue to receive strong interest from investors. On October 28, Yearn.finance founder Andre Cronje released Keep3r, a decentralized job platform powered by the KPR token market for technical jobs. Despite the lack of announcement, investors took the opportunity to get into the project, and traders pushed the price of KPR up 570% from $ 24 to $ 162.58. The project had a trading volume of over $ 255 million on its first trading day. The hype surrounding Keep3r shows that interest remains if the right project emerges. New projects and developments in DeFi can help generate interest in this area. Abugov said:
“Now, in addition to wBTC, Ethereum DeFi will be introduced with Zcash and Dash. The DEX facilitates the exchange of assets and will therefore benefit from DeFi’s overall growth. ”