The decentralized exchange (DEX) on Ethereum is dominating the market. People’s ETH deposit fees paid to centralized exchanges declined, while the trading volume of DEX such as Uniswap continued to increase.
On the Ethereum blockchain network, when users send transactions, they need to pay transaction fees in the form of Gas. If the ETH fees associated with centralized exchanges drop significantly, it may indicate an overall decrease in the activity of Ethereum users on centralized exchanges.
Glassnode analysts found that the proportion of Ethereum fees used for centralized exchange deposits has fallen from 25% three years ago to 1%. They said, “A graph shows the change from CeFi to DeFi. The proportion of ETH deposit fees paid to centralized exchanges on Ethereum has dropped from about 25% in 2017 to less than 1% today. In the past few months Here, almost all TXS fees involving centralized exchanges are used for ETH withdrawals.”
One of the main reasons why major DEXs can surpass some large centralized exchanges in trading volume is availability and liquidity.
In the past two years, the attractiveness of users relying on decentralized exchanges has decreased. At that time, the DeFi cycle did not develop to its current scale, and there was not enough interest in the emerging DeFi projects.
Most importantly, decentralized exchanges are now as liquid as many top centralized exchanges. This means that traders can trade large amounts of cryptocurrencies without severe slippage and lack of liquidity.
For example, as of December 12, Uniswap’s liquidity was US$1.6 billion and daily trading volume was US$246 million.
Some Ethereum users speculate that as ETH and DeFi users flock to decentralized exchanges, centralized exchanges may be trying to guide people to Bitcoin.
Uniswap founder Hayden Adams acknowledged this and said it was a logical speculation. He said, “This is a good point. Ethereum/ERC20 is mainly used for decentralized platforms (DApp), and Uniswap is going beyond centralized exchanges (CEX). Bitcoin does not have smart contracts, so it is mainly used for centralization. Platform, used for functions other than payment.”
Planet Frontline｜Ethereum DEX is competing for CEX market share According to Crypto Fees data, Uniswap processes more than US$880,000 in Ethereum network fees every day. This is only a difference of $400,000 from the daily cost of the Bitcoin network of approximately $1.285 million.
In addition, the wider DEX market gains a larger share in the global cryptocurrency trading market every day. CoinGecko CEO Bobby Ong pointed out, “Among DEXs, SushiSwap has grown strongly and currently accounts for 11% of the top 7 DEX market shares. Even though Suswap’s “blood sucking” has taken some of the mining liquidity, Uniswap still maintains a very strong lead. Advantage. However, the overall monthly volume of DEX fell by US$3.3 billion from the previous month.”
