After China banned cryptocurrency, DEX came to the rescue


In the past few months, there have been some major developments in China that have shook the cryptocurrency market and the global financial market.China’s Evergrande debt repayment crisis Brought shock waves to the global stock market and the U.S. Securities and Exchange Commission (SEC) Consistent signal of upcoming regulation Stable coins and decentralized finance (DeFi) continue to affect market sentiment.

Although Evergrande’s situation has been resolved, for now, the government’s crackdown on unregulated DeFi platforms and stablecoin transactions continues. This has led to an increase in the volume of transactions equipped with cross-chain first-layer protocols and second-layer solutions as traders look for decentralized places to interact.

According to CryptoQuant CEO Ki Young Ju, after China announced a ban on all cryptocurrency transactions, major cryptocurrency exchanges such as Huobi suspended their services to accounts in mainland China.

This triggered the outflow of funds from the Centralized Asian Exchange (CEX), which was eventually deposited in the Decentralized Exchange (DEX) and the broader Decentralized Finance (DeFi) ecosystem.

Considering the hypothetical failure of Ethereum’s London hard fork in addressing unsustainable gas fees and growing regulatory concerns about the U.S. and China’s response to cryptocurrencies, this phenomenon is particularly interesting and requires further investigation.

Let’s take a look at some of the recent booming DEX and popular protocols that have increased inflows.

Ethereum network

The Ethereum network is by far the most important smart contract. It has the largest and most commonly used decentralized exchanges, such as Uniswap (UNI) and SushiSwap (SUSHI), based on data from Dune Analytics.

Monthly DEX trading volume.Source: Sand Dune Analysis

Although the recent cryptocurrency ban dominated the headlines in the last two weeks of September, the announcement was Originally produced on September 3rdAround the same time, Uniswap’s activity surged.

Uniswap transaction volume and total revenue.Source: Token Terminal

As shown in the figure above, the surge in Uniswap activity and trading volume actually started on August 28 and has been higher than the previous average for the next few weeks.

Uniswap has also benefited from its recent and newly released The second layer solution Optimism and Arbitrum, Which helps reduce transaction costs and speed up the confirmation time for network users.

Fantom network

Since the launch of the bridge to the Ethereum network and 370 million FTM developer incentive plan Aims to attract new projects to the Fantom ecosystem.

Data from Token Terminal shows that although the incentive plan announced on August 30 provided an initial boost to agreement revenue and token prices, it was not until the announcement by the Chinese regulatory authority on September 3 that activity and agreement revenue truly experienced a continuous increase. .

Fantom price and agreement revenue.Source: Token Terminal

Fantom uses a directed acyclic graph architecture to achieve high throughput capabilities at close to zero fees, which helps the protocol become more and more popular among DeFi and NFT traders, who are priced to trade on Ethereum.

SpookSwap and SpiritSwap are the two top DEXs on the Fantom network, currently processing an average of US$95 million in 24-hour trading volume.

avalanche

The Avalanche network is a blockchain protocol, launched in mid-August Avalanche Rush Liquidity Mining Incentive Plan, Which includes rewards and incentives worth more than $180 million, designed to attract liquidity to the DeFi ecosystem on Avalanche.

Avalanche prices and agreement revenue.Source: Token Terminal

Since the release of the incentive plan in mid-August, as users transfer assets across chains to participate in Avalanche’s evolving DeFi ecosystem, the protocol revenue and token value of the native token AVAX have been rising.

According to data from DefiLlama, the top DEXs on Avalanche are Trader Joe (JOE) and Pangolin (PNG), and their current average 24-hour trading volume is $355.2 million.

Decentralized Perpetual Transaction

The decentralized perpetual contract trading protocol dYdX became popular in September Airdrop its native DYDX tokens, User activities and numbers have also increased.

According to data from Token Terminal, the exchange’s daily trading volume exploded in the last few days of September, from an average of less than 2.1 billion U.S. dollars to more than 9 billion U.S. dollars on September 27.

The total value and transaction volume locked on dYdX.Source: Token Terminal

Regulatory crackdowns have been particularly severe on derivatives and leveraged cryptocurrency exchanges such as BitMEX and Binance, leading to increased demand for decentralized options such as dYdX and Hegic.

Although many people in the entire cryptocurrency ecosystem express regret for China’s suppression of the crypto industry, their high-handed methods may actually be a blessing in disguise. It encourages traders to venture away from centralized exchanges and enter the rapidly expanding DeFi ecosystem. The spirit of decentralization and the ability to “be your own bank” are still available to those who seek it.

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