Monthly DEX Volume Increases to Over $25 Billion in One Year

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In Brief
  • Decentralize exchange (DEX) volume has grown by over 25 times this year.

  • Before 2020, DEXs were doing less than $1 billion in volume per month.

  • New decentralized financial protocols and tools are a major cause of this growth in volume.

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For many in the crypto space, this has been the year of decentralized finance (DeFi). Data shows that Decentralized Exchanges (DEX) have achieved massive growth in the last six months.

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Decentralized applications have been a feature of the Ethereum ecosystem and other blockchain protocols in general since their inception. Many haven’t reached notable success until 2020.

Decentralized exchanges (DEX) have been around for years, back to 2017/2018 and even earlier. However, in recent times they’ve been used far more widely thanks to a growing tide of regulation.

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Changing DEX Dynamics

Data gathered by Argent, an Ethereum wallet application integrated with many DeFi applications, shows little volume movement until the beginning of January 2019.

From January 2018 until January 2019, there was barely any fluctuation in DEX volume. The crypto space was still in a multi-year bear market and the infrastructure needed to make DeFi attractive hadn’t really been established yet.

From January 2019, there was a gradual rise as total value locked (TVL) in DeFi applications eclipsed $1 billion for the first time.

Growth in the first half of the year was steady, from less than $1 billion to almost $5 billion by July. Then the exponential growth took over, as DEX volume passed the $10 billion mark in August and over $25 billion in total volume by September.

DEX volume has cooled to approximately $15 billion monthly from its all-time high. However, it appears that critical mass may have emerged in the space as it experiences massive month-over-month growth.

Dynamic DeFi

Users and institutions are usually more comfortable using centralized counterparts (CEX), even though hundreds of millions of dollars worth of cryptocurrency have been stolen from CEXs over the years.

That all changed in 2020 when decentralized financial applications like decentralized lending and DApp liquidity providers, also known as yield farmers, started to become popular.

Users that got involved early on during the DeFi craze started to see massive returns through yield farming. Farmers essentially use cryptocurrency to provide liquidity, and in exchange receive a reward in the native applications token as well as their initial stake.

This liquidity mining, or yield farming strategy, has mostly taken place on Ethereum based applications and has set the DeFi world alight.

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All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
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Harrison is an analyst, reporter, and lead specialist at BeInCrypto based out of Tel Aviv, Israel. Harrison has been involved in the cryptocurrency space since late 2016 and is passionate about decentralized ledger technology and its potential.

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