Comprehensive Analysis of the DEX Track: Five Development Trends and Future Investment Opportunities

Analysis of the Current Situation and Development Trends of the DEX Track

The DEX (Decentralized Exchange) sector has rapidly grown since the DeFi boom in June 2020, with monthly trading volume increasing 105 times to $203.95 billion within a year. The DEX market has expanded from Ethereum to chains such as BSC, Solana, and Avalanche. Currently, DEX on the Ethereum chain still dominates, with other chains lagging behind.

DEX types include AMM, cross-chain trading protocols, derivatives trading protocols, stablecoin trading protocols, and DEX aggregators. Among them, AMM is the most common, with Uniswap being the most well-known AMM.

Statistics show that there are five major trends in the DEX sector:

1. A small number of DEXs occupy the vast 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. AMM+NFT is a new trend in the development of DEX.
4. Major public chains have DEXs entering the top ranks, and new public chain DEXs are rising rapidly.
5. Stablecoin trading platforms and derivatives trading platforms have growth potential.

The overall market is currently sluggish, with DEX trading volume in August down 58.3% compared to January. Against this backdrop, five areas worth paying attention to are: established Ethereum-based DEX, cross-chain DEX, stablecoin trading protocols, Cosmos ecosystem DEX, and new public chain DEX.

DEX track data

1. Trading Volume

In terms of spot trading, the trading volume has declined overall since 2022, with August at $66.76 billion, a decrease of 58.3% compared to January. Uniswap and PancakeSwap account for more than half of the share.

In derivative trading, dYdX dominates. Compared to CEX, DEX futures trading volume accounts for only 1.4%.

The trading volume of DEX aggregators is relatively small, with 1inch's 24-hour trading volume at $1.066 million.

2. Locked Amount

5 DEXs with a locked value exceeding $1 billion: Curve, Uniswap, PancakeSwap, Multichain, Balancer. Both Curve and Uniswap exceed $5 billion, dominating the market.

3. Income from Top DEX Protocols

In the top 13 earning crypto protocols over 7 days, DEX occupies 6 spots. Among them, Uniswap, PancakeSwap, and GMX each earned over $10 million.

Categories of DEX

1. AMM: The most common type, with Uniswap as the leader.
2. Cross-Chain Trading Protocol: Combines Trading and Cross-Chain Bridge Functions
3. Derivatives Trading Agreement: including perpetual contracts, options, synthetic assets, etc.
4. Stablecoin Trading Protocol: Specifically designed for stablecoins, represented by Curve.
5. DEX Aggregator: Combines information from multiple DEXs to find the optimal swap path.

Trends in the Development of the DEX Track

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

In terms of locked assets, the top 5 DEXs have a locked amount of 16.36 billion USD, which is 6.4 times that of the 6 DEXs in the second tier. In terms of trading volume, only 5 DEXs have a 24-hour trading volume exceeding 100 million USD.

2. The proportion of cross-chain and cross-layer trading protocols has increased

Among the top 60 DEXs, there are 16 cross-chain and cross-layer deployment protocols, accounting for 1/4. Multi-chain deployment has become mainstream, with 6 out of the top 10 already deployed on L2 networks.

3. AMM+NFT becomes a new trend

Divided into AMM-based NFT trading platform and AMM adding NFT trading. sudoswap and Uniswap represent two different modes.

4. Major public chains all have DEXs that have entered the top ranks.

The native projects of 23 public chains entered the top 60. Ethereum-based DEXs dominate, but new public chains like Cronos and Arbitrum are performing well. The Cosmos ecological DeFi public chain is worth paying attention to.

5. Stablecoin and derivatives trading platforms have growth potential

The increase in stablecoin yields stimulates demand, such as Curve and Wombat Exchange. Derivatives are an important investment strategy in bear markets, with dYdX, GMX, and others using L2 solutions to enhance the experience.

Summary

Five areas to pay attention to: established Ethereum chain DEX, cross-chain DEX, stablecoin trading protocols, Cosmos ecosystem DEX, new public chain DEX.

The overall supply in the DEX track exceeds demand, and new projects need to innovate in various aspects to compete for the market. Some DEXs have a market value/locked volume of less than 0.2, reflecting that their value is underestimated.

In the long run, DEX remains an important pillar of DeFi, with a landscape of one dominant player and many strong competitors in the public blockchain space. The development of DEX on L2 is worth paying attention to, and DEX on the Ethereum chain will gradually migrate to L2.