Analyzing Five Trends of DEXs Through 60 Leading DEXs

Decentralized exchange ( DEX) has developed rapidly since June 2020, with monthly trading volume increasing by 105 times within a year, reaching $20.395 billion. The DEX market started on Ethereum and gradually expanded to multiple public chains such as BSC, Solana, and Avalanche. Currently, DEXs on the Ethereum chain still dominate, while other chain DEXs lag behind in trading volume and total value locked.

The main types of DEX include Automated Market Makers ( AMM ), cross-chain trading protocols, derivatives trading protocols, stablecoin trading protocols, and DEX aggregators. Among them, AMM is the most common type, with Uniswap being the most well-known representative of AMM.

By analyzing the top 60 DEXes by locked value, we have summarized the following five trends:

1. A few DEXs occupy the majority of the market share
2. The proportion of cross-chain and cross-layer trading protocols has increased, accounting for about 1/4 of leading DEXs.
3. The combination of AMM and NFTs is a new development direction
4. Major public chains all have DEX entering the top tier, and new public chain DEXs are developing rapidly.
5. Stablecoin trading platforms and derivatives trading platforms have significant growth potential.

The overall market is currently sluggish, with DEX trading volume in August down 58.3% compared to January. In this context, noteworthy DEX directions include:

• Ethereum's established DEX
• Cross-chain DEX
• Stablecoin Trading Protocol
• Cosmos Ecosystem DEX
• New Public Chain DEX

Current Status of the DEX Industry

1. Trading Volume

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

Spot Trading

Spot trading DEX has seen rapid growth since June 2020. The trading volume in June 2020 was $1.92 billion, reaching a peak of $203.95 billion in May 2021, an increase of 105 times in one year. Since 2022, there has been an overall downward trend, with the trading volume in August being $66.76 billion, a decrease of 58.3% compared to January.

Uniswap and PancakeSwap account for more than half of the market share. The historical monthly share of Uniswap v2, v3, and PancakeSwap has exceeded 30%. Compared to centralized exchanges, the share of DEX spot trading volume peaked at 25.51% in February 2022, and has since declined overall, reaching 18.49% in August.

Derivatives Trading

dYdX holds an absolute dominant position in decentralized derivatives trading. On September 21, dYdX's trading volume was $1.38 billion, ranking first among all DEXs. The second place, Kine Protocol, had a trading volume of $270 million, only 19.5% of dYdX.

Derivatives trading is currently still dominated by centralized exchanges, with DEX futures trading volume accounting for only 1.4% of centralized exchanges, and remaining below 3% in the long term.

DEX Aggregator

DEX aggregators collect information from multiple DEXs to find the optimal trading path for users. Representative projects include 1inch, Matcha, OpenOcean, etc., but the trading volume is relatively small. On September 21, 1inch's 24-hour trading volume was $1.066 million, while OpenOcean's was $517,000.

2. Locked Amount

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 are in the top 10 for DeFi locked value, contributing to 1/4 of the total locked value in DeFi.

3. Revenue of Head DEX Protocol

Among the top 13 crypto protocols by revenue over 7 days, DEXs occupy 6 spots. The DEXs with over $10 million in revenue in 7 days include Uniswap(4.4 million), PancakeSwap(1.66 million), and GMX(1.29 million). Among them, 3 are derivatives trading platforms, namely GMX, dYdX, and Synthetix.

4. DEX Category

The top 60 DEXs by locked value mainly include the following categories:

• AMM: The most common type of DEX, represented by the project Uniswap.
• Cross-chain trading protocol: Combining trading and cross-chain bridge functions, such as Hop Protocol and Multichain.
• Derivative Trading Agreements: Including perpetual contracts, options, and synthetic asset trading, represented by projects such as dYdX and GMX.
• Stablecoin Trading Protocol: Specifically designed for stablecoin trading, such as Curve
• DEX Aggregator: Integrates information from multiple DEXs, such as 1inch

Five Major Trends in the DEX Industry

1. A few DEXs occupy the vast majority of market share.

From the perspective of locked-up volume and trading volume, market share is highly concentrated in a few top DEXs.

In terms of locked-up volume, among the top 60 DEXs:

• 5 DEXs have a total locked value exceeding $1 billion, totaling $16.36 billion.
• 6 DEXs have a locked value between 300 million to 1 billion USD, totaling 2.55 billion USD, which accounts for only 15.5% of the first tier.
• The locked volume of Curve and Uniswap both exceed $5 billion, with a combined total of $10.39 billion, 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 ranking first and second, at 1.4 billion USD and 1.25 billion USD, respectively. The third-ranked Kine Protocol has only 270 million USD, showing a significant gap.

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

Among the 60 leading DEXs, there are a total of 16 cross-chain protocols and cross-layer deployment protocols, accounting for about 1/4. The main performance is as follows:

• Cross-chain trading protocols combine cross-chain bridges and trading functions, such as Hop Protocol, Multichain, etc.
• Traditional DEX multi-chain deployment has become mainstream, including L1 and L2 networks.
• Among the top 10 DEXs by locked-in volume, most have deployed on L2 networks or are using L2 scaling technologies.
• SushiSwap collaborates with LayerZero to launch the first cross-chain AMM SushiXSwap

3. AMM+NFT has become a new trend

There are mainly two forms of AMM+NFT:

1. NFT trading platform based on AMM mechanism, such as sudoswap
2. Add NFT trading in AMM, like Uniswap

Top AMMs are actively introducing NFT trading. Uniswap has acquired the NFT aggregator Genie and plans to integrate sudoswap to facilitate NFT trading. More AMMs are expected to launch NFT trading products to provide users with a diversified asset trading experience.

4. Major mainstream public chain DEXs are entering the forefront, and new public chain DEXs are rapidly emerging.

60 leading DEXs come from 23 public chains, including Ethereum, BNB Chain, Polygon, Arbitrum, etc. DEXs on the Ethereum chain still dominate, with 7 out of the top 8 in terms of locked assets, totaling $14.88 billion, accounting for 46.8% of the total locked assets in Ethereum's DeFi.

Other leading DEXs on public chains:

• BNB Chain: PancakeSwap, locked value of $2.89 billion, ranked 3rd
• Cronos: VVS Finance, locked amount of $410 million, ranked 9th
• Arbitrum: GMX, locked amount of 400 million USD, ranked 10th

The new public chain DEXs have performed remarkably, with 6 new public chains including Cronos, Arbitrum, and DefiChain each having 1 DEX entering the top 30.

New public chains worth paying attention to:

• Cosmos Ecosystem: Osmosis, THORChain, Canto, etc.
• Klaytn: 3 native DEXs enter the top 60

5. Stablecoin and derivatives trading platforms have growth potential

Against the backdrop of a sluggish market, user demand for stablecoins and crypto derivatives investment is on the rise.

Stablecoin trading platform:

• Curve: An established stablecoin trading platform, ranked first in locked-up volume, with a 7-day increase of 12.5%.
• Wombat Exchange: An emerging multi-chain stablecoin trading protocol that uses single-asset liquidity pools.

Derivatives Trading Platform:

• Leading platforms such as dYdX, GMX, and Synthetix all use L2 scaling solutions.
• The combination of L2+ derivatives is a recent focus hotspot.

Summary

5 noteworthy directions in the DEX space:

1. The established DEX of Ethereum ( like Uniswap )
2. Cross-chain DEX ( like Hop )
3. Stablecoin trading protocol ( like Curve )
4. Cosmos ecosystem DEX ( such as Osmosis )
5. New public chain DEX( like Canto DEX)

Currently, DEX is in a state of oversupply, with new projects seeking innovation in terms of mechanisms and functions. Against the backdrop of a sluggish market, several DEXs have a market cap/locked volume ratio below 0.2, indicating a possibility of being undervalued.

In the long term, DEX remains an important pillar and entry point for DeFi. The landscape of public chains shows a trend of one dominant and many strong, with Ethereum leading, while other chains expand their ecosystems to capture market share. The development of DEX on L2 networks is worth noting, as it has clear advantages of low slippage and low gas fees. Ethereum DEX will gradually migrate to L2, and L2 native DEX will also expand its market share.