Decentralized Exchanges (DEX) Rebound Strongly: $29 Billion Traded in November

November witnessed a remarkable resurgence in monthly trading volumes on decentralized exchanges (DEX), with a total of $29 billion, signaling a substantial recovery from a multiyear low observed in September.

The recent upswing in the cryptocurrency market has had a notable spill-over effect on the decentralized finance (DeFi) arena.

Traditionally, DEX trading volumes have lagged significantly behind those of centralized exchanges (CEX). However, the recent market rally has spurred increased DEX activity, though at a somewhat steadier pace.

DEX Trading Volume Gains Momentum

Kaiko’s research reveals that major platforms like Uniswap and Curve on the Ethereum blockchain, along with Pancakeswap on the Binance Smart Chain, have witnessed a surge in trading activity.

In November, the monthly trading volume on DEXs rebounded to an impressive $29 billion, bouncing back from the multi-year low recorded in September. Despite this positive recovery, it still falls well short of the all-time high exceeding $124 billion noted in May 2021. Additionally, the market share of DEX trading volume compared to CEX has declined over the past year, dropping from 5% in January to just 3% in November.

It’s noteworthy that during the peak of DeFi enthusiasm in November 2020, DEXs held an all-time high market share of 10%. This suggests that DEXs were more profoundly affected by the decrease in market participation observed since the FTX collapse.

While Uniswap, the largest DEX, has seen a reduction in its market share relative to Coinbase, it still maintains a significant position at 40%.

The surge in DEX activity is also reflected in elevated lending rates, especially for stablecoins, indicating an increase in the number of loans taken out, often for trading purposes.

DEX Trading Volume Throughout Q3

While there were signs of recovery in the latter part of Q1, the upward trend in trading volumes did not persist in Q2. Centralized cryptocurrency exchanges were particularly affected by regulatory pressures, resulting in significant losses for them.

However, decentralized exchanges were also impacted by the ensuing turbulent market conditions. In Q2, the spot trading volume on the top 10 DEXs dropped by more than 30% compared to Q1, amounting to $155 billion.

In Q3 2023, the total spot trading volume on the leading 10 DEXs reached $105 billion, marking a -31.2% decline compared to the previous quarter.

During the third quarter, CoinGecko noted significant growth in THORchain, with a 113% increase in volume, equivalent to $1.27 billion. This surge in volume may be partly attributed to illicit transfers on the network involving notable users such as the FTX hacker and the North Korean Lazarus group.

In contrast, Sushi, a long-standing presence on DEXs since its inception in 2020, dropped out of the top 10 during the period, making way for Orca.

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