Decentralized Exchanges Surge: The Market Trends of DEXs in Q3 2020

Explosive Growth in Trading Volume

In a surprise twist worthy of a plot twist in an action movie, the trading volume on decentralized exchanges (DEXs) absolutely rocketed in Q3 2020, hitting a jaw-dropping $42.6 billion. That’s a 1,132% increase from the previous quarter! You’d think the stock market just discovered fire!

The Monthly Rollercoaster

July was the star of the show, with trading volumes vaulting to $5 billion—up one-third compared to a whole two months of trading in Q2. That’s like running a marathon only to get tripped by a puppy in the last stretch. However, like any good rollercoaster, October saw a dip as Bitcoin (BTC) decided to flex its muscles, pulling some traders back into the comforting embraces of centralized exchanges.

DEXs: The New Kids on the Block

While trading volumes were climbing, the distribution wasn’t exactly democratic. UniSwap alone accounted for up to 50% of trading on DEXs, while the top three exchanges monopolized almost three-quarters of the action. In total, eight decentralized exchanges topped $1 billion in trading volume this quarter—a big leap from a goose egg in Q2.

The ‘Wealth Effect’ Phenomenon

So, what’s fueling this frenzy? According to a report from TokenInsight, the so-called “wealth effect” brought on by DEXs has created a whole new market space. They’ve practically rolled out the red carpet, giving everyday traders access to quality projects before they glide into the spotlight of secondary markets, particularly during the DeFi boom. It’s like being invited to a VIP party where you can mingle before the main event.

The DEX vs. Centralized Exchanges Dynamic

It’s worth noting that this rise of DEXs has shifted the relationship between token projects and centralized exchanges. Previously, centralized giants could demand hefty fees to list tokens, but with DEXs providing an alternative marketplace, projects can breathe easier, growing without the suffocating grip of centralized control. It’s a bit like David vs. Goliath, but in a digital world.

The Final Word

Despite these impressive gains, it’s important to keep everything in perspective—DEXs still accounted for only 1.24% of the total spot market transactions during Q3. So, while the party has certainly started, there’s still a long way to go before the DEXs can claim the crown as the ruling class of trading platforms. Just think of it as the opening act of a concert; the headliners haven’t even arrived yet!