Analysis of the Five Major Trends in the DEX Sector

The decentralized trading platform (DEX) has rapidly developed since June 2020, with a surge in trading volume. Although the market is currently sluggish and DEX trading volume has declined, there are still several noteworthy directions for development. By analyzing 60 leading DEX projects, we have identified the following five major trends:

1. Market share is highly concentrated

Whether from the perspective of locked assets or trading volume, a few DEXs occupy the vast majority of the market share:

• In terms of locked value, the total locked amount of the top 5 DEXs is $16.36 billion, which is 6.4 times the total locked amount of DEXs ranked 6-10. Among them, both Curve and Uniswap have locked amounts exceeding $5 billion, accounting for 63.5% of the total of the top 5.

• In terms of trading volume, only 5 DEXs have a 24-hour trading volume exceeding 100 million USD. dYdX and Uniswap v3 rank first and second, with trading volumes of 1.4 billion and 1.25 billion USD, far surpassing other DEXs.

2. The proportion of cross-chain and cross-layer protocols is increasing

Among the 60 leading DEXs surveyed, the number of cross-chain and cross-layer protocols has reached 16, accounting for approximately one-quarter. This reflects the trend of DEXs expanding to multi-chain and multi-layer.

• More and more DEXs support trading and asset transfers across multiple public chains, such as Hop Protocol, Multichain, etc.

• Traditional DEXs are also deploying on Layer 2 networks to reduce gas fees and increase transaction speeds.

• New types of DEXs such as cross-chain AMMs are emerging, like SushiXSwap.

3. The combination of AMM and NFT becomes a new direction

DEX is integrating with the NFT market, mainly reflected in two aspects:

• The rise of NFT trading platforms based on the AMM mechanism, such as sudoswap. These platforms introduce liquidity pool mechanisms to enhance the liquidity of NFTs.

• Leading AMM projects are starting to venture into NFT trading. For example, Uniswap has acquired the NFT aggregator Genie and plans to integrate sudoswap's NFT AMM features.

4. The Rapid Rise of New Public Chain DEX

Apart from Ethereum, major public chains have their native DEXs entering the top ranks:

• PancakeSwap on BNB Chain, VVS Finance on Cronos, GMX on Arbitrum, etc. all entered the top 10 in terms of locked value.

• The native DEX of new public chains such as Klaytn, DefiChain, and Osmosis are performing remarkably.

• The built-in DEX of Cosmos ecosystem applications like Osmosis and THORChain are worth paying attention to.

5. The Potential of Stablecoin and Derivatives Platforms is Huge

In the current market environment, stablecoin and derivatives trading platforms have significant growth potential:

• Stablecoin trading platforms such as Curve and Wombat Exchange are benefiting from the rising demand for stablecoins.

• Derivatives trading platforms like dYdX and GMX provide users with hedging tools and often use Layer 2 scaling solutions.

In summary, the future directions worth paying attention to in the DEX track include: leading Ethereum DEX, cross-chain DEX, stablecoin trading protocols, Cosmos ecosystem DEX, and new public chain DEX. In the long term, DEX will still be an important infrastructure for DeFi, but the landscape of public chains may present a situation of one dominant player and many strong competitors. At the same time, the development of DEX on Layer 2 also deserves ongoing attention.