DeFi and DEX volumes skyrocket amid China’s crypto ban and ongoing US regulations

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China’s harsh crackdown on crypto trading last week briefly sent shockwaves through the market as Bitcoin and altcoin prices fell sharply after the announcement, but as it was. is the case with everything crypto related, the market has rebounded as resilient traders have found other ways to participate in the market.

Part of China’s goal of limiting the ability of citizens to trade cryptocurrency seems to be to discourage the use of cryptocurrencies and the growing decentralized finance (DeFi) ecosystem, but these maneuvers seem to be have the opposite effect of token price and protocol activity for projects like Uniswap (UNI) and dYdX have seen a slight increase since the crackdown began.

According to Chainalysis data, there has been a significant amount of regional Bitcoin (BTC) flows in East Asia, as highlighted by the large orange bar in the chart below. This suggests that crypto holders in the region have moved their holdings in response to regulatory crackdown.

Regional BTC feeds. Source: chain analysis

As noted by Chainalysis, assets typically flow within a region, possibly due to preferences for local trade, but flows between regions often occur due to regulatory issues, geopolitical shifts, or large price swings. of the market.

The lack of flow from East Asia combined with crypto exchanges like Huobi and Binance suspending services for Chinese residents suggests funds are being held in the region, but not on centralized exchanges.

It looks like Huobi users have moved $ ETH, #stablecoins, and DEX tokens to decentralized exchanges like Uniswap.

Outbound transactions increased after Huobi announced the suspension of existing accounts in mainland China.

Ironically, regulation this time has led to decentralization. pic.twitter.com/EKpkHIdSv0

Ki Young Ju (@ki_young_ju) September 29, 2021

Related: DEX Derivatives dYdX Beats Coinbases Spot Markets By Volume Amid China FUD

Gains in the DeFi ecosystem

Along with this increased movement within the East Asian region, activity on decentralized exchanges like Uniswap and the decentralized derivatives exchange dYdX has increased as traders in China seek refuge. for their cryptographic activities.

Uniswap trade volume in relation to total revenue. Source: Token Terminal

DydX is a particularly useful data point as it is now the most widely used decentralized derivatives exchange and has seen an increase in demand after regulators around the world dropped the hammer on centralized exchanges with policies. KYC flexible that offer derivative services.

According to data from Token Terminal, dYdX has been in the top 5 for many categories over the past week, including increased token prices, total protocol revenue, fees paid, price / sales ratio and the price / benefit ratio. The stock market also climbed into the top 6 in terms of the increase in total blocked value (TVL).

Total income against the total value locked on dYdX. Source: Token Terminal

A closer look at the available data also shows that layer two protocols and Ethereum (ETH) layer one competitors have also seen some of the biggest gains over the past week, including avalanche-based protocols like Trader Joe and Pangolin. than the Fantom network.

Above all, what recent data shows is that the decentralized finance ecosystem is functioning as it was originally intended by offering crypto holders an uncensored way to transact out of control and out of control. the competence of governments and financial regulators.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move comes with risk, you should do your own research before making a decision.

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