In-Depth Analysis: Five Major Development Trends of Decentralization Platforms

The decentralized trading platform ( DEX ) has rapidly developed since the DeFi boom in June 2020, with monthly trading volume increasing 105 times in a year, reaching $20.395 billion. The DEX market started with Ethereum and gradually expanded to multiple public chains such as BSC, Solana, and Avalanche. Currently, Ethereum remains the main battlefield for DEX, while DEXs on other public chains still lag behind Ethereum in terms of trading volume and locked value.

Through the analysis of 60 leading DEXs, we have identified five major development trends in the DEX sector:

1. The head effect is obvious, with a few DEXs occupying most of the market share.
2. The proportion of cross-chain and cross-layer trading protocols is increasing, accounting for about 1/4 of the leading DEX.
3. AMM+NFT becomes a new trend
4. Major mainstream public chains have DEXs entering the top ranks, and new public chain DEXs are developing rapidly.
5. Stablecoin trading platforms and derivatives trading platforms have significant growth potential.

Affected by the sluggish market, the trading volume of DEX in August has decreased by 58.3% compared to January. Against this backdrop, there are 5 directions in the DEX track worth paying attention to:

• Established Ethereum chain DEX
• Cross-chain DEX
• Stablecoin Trading Protocol
• Cosmos Ecosystem DEX
• New Public Chain DEX

Overview of the DEX Track

1. Trading Volume Analysis

DEX trading volume can be divided into three categories: spot trading, derivatives trading, and DEX aggregators, with spot trading being the dominant category.

Spot Trading

The spot trading DEX began to grow rapidly in June 2020, with trading volume increasing 105 times within a year, reaching $203.95 billion. Since 2022, the trading volume has shown an overall downward trend, with August seeing $66.76 billion, a 58.3% decrease from January.

The trading volume of Uniswap and PancakeSwap accounts for more than half of the total. The historical highest months for Uniswap v2, v3, and PancakeSwap all exceed 30%.

The spot trading volume ratio of DEX to CEX reached a peak of 16.97% in September 2020 and 25.51% in February 2022. Since February of this year, the overall ratio has shown a downward trend, with August at 18.49%.

Derivatives Trading

dYdX occupies an absolute dominant position in the decentralized derivatives trading market. On September 21, dYdX's trading volume was $1.38 billion, ranking first among all DEX.

The derivatives trading market is currently still dominated by centralized trading platforms, with the DEX futures trading volume accounting for only 1.4% of the CEX, remaining below 3% in the long term.

DEX Aggregator

DEX aggregators collect information from multiple DEXs to find the optimal trading path for users. 1inch, Matcha, and OpenOcean are the leading projects in this category, but their trading volumes are relatively small. On September 21, the 24-hour trading volumes for 1inch and OpenOcean were $1,066,000 and $517,000 respectively.

2. Locked Volume Analysis

Currently, there are 5 DEXs with a locked value exceeding 1 billion USD, namely Curve, Uniswap, PancakeSwap, Multichain, and Balancer. Among them, both Curve and Uniswap have locked values exceeding 5 billion USD, dominating the DEX sector.

Curve, Uniswap, and PancakeSwap all rank in the top 10 for DeFi protocol locked value, with their respective shares in the total DeFi locked value being 10%, 9.6%, and 5.4%, collectively contributing to 1/4 of the DeFi locked value.

3. Revenue of leading DEX protocols

Among the top 13 cryptocurrency protocols by revenue in the past 7 days, DEX occupies 6 seats. The DEX with over $10 million in revenue in the past 7 days includes Uniswap ( $4.4 million ), PancakeSwap ( $1.66 million ), and GMX ( $1.29 million ). Among these 6 DEXs, 3 belong to derivatives trading platforms, namely GMX, dYdX, and Synthetix.

Main Categories of DEX

1. AMM( Automated Market Maker ): Currently the most common type in the DEX race, Uniswap is the leading project.

2. Cross-chain trading protocols: Combining trading and cross-chain bridge functions, such as Hop Protocol, Multichain, Hashflow.

3. Derivatives Trading Protocol: including perpetual contracts, options, and synthetic asset trading protocols. Representative projects include dYdX, GMX, Lyra, Opyn, Synthetix, etc.

4. Stablecoin Trading Protocol: Specifically designed for stablecoin trading, such as Curve.

5. DEX Aggregator: Gathers information from multiple DEXs to find the optimal trading path for users. Representative projects include 1inch, Matcha, OpenOcean.

Detailed Analysis of Five Development Trends in the DEX Track

1. The head effect is obvious.

The data on locked assets and trading volume shows that a few DEXs dominate the majority of the market share.

In terms of locked-up volume, the top 5 DEXs have a locked-up volume of over 1 billion USD with a total locked-up volume of 16.36 billion USD, while the second tier has a total locked-up volume of only 2.55 billion USD, accounting for 15.5% of the first tier. Among them, both Curve and Uniswap have locked-up volumes exceeding 5 billion USD, together accounting for 63.5% of the first tier.

In terms of trading volume, only 5 DEXs have a 24-hour trading volume exceeding 100 million USD, with dYdX and Uniswap v3 at 1.4 billion and 1.25 billion USD respectively, far surpassing the 270 million USD of Kine Protocol, which ranks third.

( 2. The proportion of cross-chain and cross-layer trading protocols is increasing.

Among the top 60 DEXs, the total number of cross-chain protocols and cross-layer deployment protocols is 16, accounting for about 1/4. Cross-chain trading protocols such as Hop Protocol, Multichain, and Hashflow combine cross-chain bridge and trading functions, supporting transactions and asset transfers across multiple chains.

DEX multi-chain deployment without cross-chain functionality has also become a mainstream trend. Among the top ten projects by locked value, Curve, Uniswap, SushiSwap, Balancer, dYdX, and Synthetix have all been deployed on L2 networks or utilize L2 scaling technologies.

Cross-chain AMM has emerged as a new species, and SushiSwap has partnered with LayerZero to launch the first cross-chain AMM, SushiXSwap.

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) 3. AMM+NFT has become a new trend

AMM+NFT is divided into two categories: NFT trading platforms based on the AMM mechanism ### such as sudoswap ( and adding NFT categories ) to AMM tradable assets such as Uniswap ###.

Sudoswap and other NFT trading platforms based on the AMM mechanism innovatively introduce the AMM mechanism to enhance NFT liquidity. Users can create NFT liquidity pools, specifying the NFT series, quantity, price, and other details they wish to buy or sell.

Leading AMMs are also actively introducing NFT trading. Uniswap acquired the NFT trading aggregator Genie and plans to implement NFT trading through the integration of sudoswap. More AMMs are expected to launch NFT trading products in the future, providing users with trading experiences across various asset classes.

( 4. Major public chains have DEXs entering the top ranks, and new public chain DEXs are developing rapidly.

Among the top 60 DEXs by locked volume, there are native projects from 23 public chains including Ethereum, BNB Chain, Polygon, Arbitrum, Optimism, NEAR, Avalanche, and more.

Ethereum's native DEXs still dominate, with 7 out of the top 8 DEXs by locked value coming from Ethereum. The total locked value of these 7 DEXs is $14.88 billion, accounting for 46.8% of the DeFi locked value on the Ethereum chain, nearly 2.9 times that of the DeFi locked value on the BNB Chain.

Other DEXs that perform outstandingly on other public chains include:

• PancakeSwap on BNB Chain: Locked amount $2.89 billion, ranked 3rd
• VVS Finance on Cronos: Lock-up amount of $410 million, ranked 9th
• Arbitrum's GMX: locked amount of 400 million dollars, ranked 10th

The new public chain DEXs performed excellently, with one native DEX from each of the six new public chains including Cronos, Arbitrum, DefiChain, Osmosis, Klaytn, and Elrond entering the top 30.

It is worth noting that four application chains are built with DEX functionality: DefiChain, Osmosis, THORChain, and Canto. Among them, Osmosis, THORChain, and Canto all belong to the Cosmos ecosystem, which is worth continuous attention in the Cosmos ecosystem DeFi public chain.

In addition, the Klaytn public chain under South Korean internet giant Kakao has performed excellently, with three native DEXs entering the top 60 in terms of locked value, among which KlaySwap has a locked value of 170 million USD, ranking 17th.

![Scanning 60 top DEXs, we found these 5 trends])https://img-cdn.gateio.im/webp-social/moments-0c4d5b033a14af503f11bb6438903a4f.webp(

) 5. Stablecoin and derivatives trading platforms have growth potential.

Against the backdrop of a sluggish market, users' investment demand for stablecoins and derivatives has risen.

In terms of stablecoins, the off-market prices of USDT, USDC and other stablecoins pegged to the US dollar have surpassed 7 yuan, with returns on holdings performing better than ETH and BTC. This may stimulate market demand for stablecoin yield products, such as the stablecoin trading platforms based on the AMM mechanism like Curve and Wombat Exchange.

Curve, as an established stablecoin trading platform, has a large user base and offers various risk-return combinations. The minimum APR for Curve liquidity pools is approximately 6.3%, while the maximum is about 15.9%. Curve's locked position increased by 12.5% over 7 days, making it the largest increase among the top 10 projects in DeFi.

Wombat Exchange adopts single-coin liquidity pools to enhance capital efficiency, with the main pool's APR between 12% and 15%.

Derivatives trading is an important investment strategy in a bear market, with perpetual contracts and options being commonly used hedging tools. Leading platforms dYdX, GMX, and Synthetix all utilize L2 scaling solutions to enhance user experience. The combination of L2 and derivatives has become a recent focus.

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Summary and Outlook

According to current trends, there are 5 directions worth noting in the DEX track:

1. Established Ethereum-based DEX) such as Uniswap, SushiSwap###
2. Cross-chain DEX ( such as Hop, Hashflow )
3. Stablecoin trading protocol ( like Curve )
4. Cosmos ecosystem DEX ( such as Osmosis )
5. New public chain DEX( such as Canto DEX)

The overall supply in the DEX track exceeds demand, and the basic functions can meet the needs. New DEXs are innovating in areas such as liquidity pools, AMM mechanisms, functional aggregation, products, and customization to capture market share. Investors can pay attention to the segmented tracks of DEX.

In the context of a sluggish market, several DEXs have an Mcap/TVL of less than 0.2, reflecting being undervalued, including Curve, Wombat Exchange, dYdX, etc. These undervalued DEXs are worth paying attention to, but given the overall market downturn, no investment advice is provided here.

In the long run, DEX still represents DeF