Q3 Crypto Volumes up by $155 Billion as Defi Hype Drives DEX Growth by 197%

The latest data from Coingecko shows that the combined trading volumes of cryptocurrency exchanges went up by $155 billion between July and September, from $175.7 billion to $330.6 billion. The new total volume represents a 88% increase which Coingecko attributes to the decentralized finance (defi) hype and yield farming frenzy that peaked in August.

In the report, Coingecko also observes that from the start of Q3, traded volumes on decentralized exchanges (dexs) grew much faster than those of centralized exchanges (cexs). For instance, in Q3, “the monthly average dex trading volumes (of top ten dexs) grew by 197%, outperforming the average volumes of the top ten cexs, which went up 35%.” Despite the explosive growth, which also appeared to slow in September, dex volumes account for just 6% of total cex volumes.

Explaining the relatively modest performance by cexs, the report observes that while the month of August proved to be the best after volumes grew by 83%, September trades ultimately reversed the previous month’s gains. According to the report, cex volumes dropped from $314.6 billion seen in August to $300 billion by end of September. The report states that Coinbase and Okex contributed 60% of the reversal.

Meanwhile, the report also provides data on the performance of individual dex platforms during the period. As the data shows, Uniswap, which contributed just under 50% of total dex volumes in July, saw its market share grow to 63% by end of September. Following Uniswap is Curve which experienced a fast-changing quarter after its share initially dropped from 24% in July to 13% in August. However, by the end of September, Curve had recovered after contributing 17% to total dex volumes.

In the meantime, Sushiswap, which forked from Uniswap on August 28, managed to account for 8% of the total volumes by the end of September. The rest of the dex protocols contributed 4% or less to the total volumes.

Next, the Coingecko report provides a timeline of key events that explain the apparent rivalry between Uniswap and Sushiswap. The report highlights that after forking, Sushiswap went on “to introduce a new token (SUSHI), distributed via liquidity mining.”

Explaining the significance of this move, the report says:

“Unlike Uniswap which shares 0.3% of trading fees to liquidity providers, Sushiswap shares 0.25% to liquidity providers with the remaining 0.05% being converted to SUSHI and distributed to SUSHI holders. Mining returns of over 2,000% drew in over $1.4 billion to Sushiswap at its peak.”

On September 18, Uniswap began liquidity mining and since then its total-value-locked (TVL) soared to over $2 billion by the end of that month. Lastly, the Coingecko report suggested that non-fungible tokens (NFT) farming are showing signs that they could be the next big thing after defi tokens.

Do you think DEXs volumes will continue to grow as they did in Q3? Tell us what you think in the comments section below.

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