CRYPTO

China comes to the rescue of DEXs after banning crypto


Over the past few months, there have been some major developments from China that have stunned the cryptocurrency market and global financial markets. The debt repayment crisis in China’s Evergrand has sent a series of signals of impending regulation for the global equity market as well as the US Securities and Exchange Commission (SEC) for stable currency and decentralized money (DFI), depending on market sentiment.

Although the Evergrand situation has been somewhat resolved, for now, the government’s crackdown on unregulated DFI platforms and stable coin transactions continues. This has led to an increase in cross-chain-equipped Layer-One protocols and layer-to-solution solutions as merchants search for interactions with decentralized spaces.

According to Ki Young Xu, chief executive of CryptoQuant, major cryptocurrency exchanges such as Huobi have suspended services for accounts in mainland China after China imposed a ban on all cryptocurrency transactions.

This led to the abandonment of funds from Asia-based centralized exchanges (CEXs) and these funds eventually accumulated between decentralized exchanges (DEXs) and larger decentralized money (DeFi) ecosystems.

The incident is particularly interesting and needs further investigation, due to regulatory concerns about the ineffective gas fees of Ethereum’s London Hard Fork and the growing reaction of the US and China to cryptocurrencies.

Let’s take a look at some of the recent rich DEXs and popular protocols that are seeing an increase in flow.

Etherium network

The Etherium network is by far the most influential smart deal and it hosts the largest and most widely used decentralized exchanges, such as UNIWAP (UNI) and SushiSwap (Sushi), according to data from Dun Analytics.

Monthly DEX volume. Source: Dunn Analytics

Although the most recent cryptocurrency ban outside China was headlined in the last two weeks of September, the announcement was originally made on September 3, at the same time Uniswap’s activity increased further.

Uniswap Trading Volume vs. Total Revenue. Source: Token Terminal

As shown in the graph above, the spike in Uniswap’s activity and trading volume actually started on August 28 and rose above its previous average for the next few weeks.

Uniswap has also benefited from the recent integration with the newly released Layer-to-Solution Optimism and Arbitram, which has helped reduce transaction costs and speed up user confirmation time on the network.

Phantom Network

The Phantom Protocol has been featured in recent months on a 370 million FTM developer incentive program to launch a bridge across the Etherium network and attract new projects to the Phantom ecosystem.

Although the announcement of the incentive program on August 30 provided protocol revenue and initial improvement in token prices, there was not a steady increase in activity and protocol revenue experience from China until the regulatory announcement on September 3, according to data from Token Terminal.

Phantom Price vs. Protocol Revenue. Source: Token Terminal

The Phantom uses a guided acyclic graph architecture that enables a high throughput capability for fees near zero, which has helped the protocol grow in popularity among DFI and NFT traders whose value was beyond managing transactions in Ethereum.

SpookSwap and SpiritSwap are the two top DEXs on the Phantom Network and together currently handle an average of $ 95 million in 24-hour trading volume.

Snowfall

The Avalanche Network is a blockchain protocol that launched the Avalanche Rush Liquidity Mining Incentive program in mid-August, which includes more than $ 180 million in rewards and incentives to attract liquidity to the DFI ecosystem over inflation.

Snowfall prices vs. protocol revenue. Source: Token Terminal

Since the release of the incentive program in mid-August, protocol revenue and the token value of the domestic token AVAX have increased as users have shifted resources across the chain to integrate with the growing DFI ecosystem of the avalanche.

According to Defillama, the top DEXs for Snowfall are Trader Joe (JOE) and Pangolin (PNG), which together are currently trading at an average of 35 3555.2 million in 24 hours.

Decentralized perpetual trade

The decentralized perpetual trading protocol dYdX, which exploded in popularity after the airdrop of its domestic DYDX token in September, has also seen improvements in user activity and volumes.

According to Token Terminal, the exchange’s daily trading volume exploded in the last days of September, rising from an average of 2. 2.1 billion in September to more than billion 1 billion.

Total value locked in dYdX vs. trading volume. Source: Token Terminal

Regulatory crackdowns on derivative and leveraged cryptocurrency exchanges such as Bitmax and Binance were particularly difficult, leading to increased demand for decentralized alternatives such as Dividex and Hedge.

Although many across the cryptocurrency ecosystem lamented China’s crackdown on the crypto sector, their heavy hand could actually become a blessing in disguise. It encourages traders to move away from centralized exchanges and towards a rapidly growing DFI ecosystem where the policy of decentralization and the ability to be “your own bank” is still available to those looking for it.

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