DEX come to the rescue after China bans crypto

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Over the past few months, there have been major developments from China that rocked the cryptocurrency market and global financial markets. China’s Evergrande debt repayment crisis has sent shockwaves through global stock markets, along with constant signals from the United States Securities and Exchange Commissions (SEC) regarding upcoming coin regulation. stable and decentralized finance (DeFi) continued to weigh on sentiment in the market.

While the Evergrande situation has resolved somewhat, for now, the government crackdown on unregulated DeFi platforms and stable transactions continues. This has resulted in layer one protocols and layer two solutions equipped with cross-chains, with increased volumes as merchants seek out non-centralized sites to interact with.

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

This triggered an exodus of funds from Asia-based Centralized Exchanges (CEXs), and these funds were eventually deposited into Decentralized Exchanges (DEX) and the broader Decentralized Finance (DeFi) ecosystem.

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

This phenomenon is of particular interest and requires further investigation, given the alleged failure of Ethereums London’s hard fork to resolve unsustainable gas charges and growing regulatory concerns over the US and China’s response to crypto. -coins.

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

The Ethereum network

The Ethereum network is by far the most dominant smart contract and it hosts the largest and most widely used decentralized exchanges like Uniswap (UNI) and SushiSwap (SUSHI), according to data from Dune Analytics.

Monthly DEX volume. Source: Dune Analytics

While the most recent cryptocurrency ban outside of China grabbed headlines in the last two weeks of September, the announcement was originally made on September 3, around the same time that the Uniswap activity has increased.

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

As the chart above shows, the peak in Uniswaps activity and trading volume actually started on August 28 and has remained high above its previous average for the next two weeks.

Uniswap has also benefited from its recent integrations with new Layer Two solutions Optimism and Arbitrum, which have reduced transaction costs and accelerated confirmation times for network users.

The Fantom network

The Fantom protocol has gained prominence in recent months with the launch of a bridge to the Ethereum network and a 370 million FTM developer incentive program designed to attract new projects to the Fantom ecosystem.

Data from Token Terminal shows that while the announcement of the incentive program on August 30 gave a first increase in protocol revenue and token price, it was not until after China’s regulatory announcement the September 3 that the activity and protocol revenues really experienced sustained growth. to augment.

Fantom price vs protocol turnover. Source: Token Terminal

Fantom uses a directed acyclic graphics architecture that enables high throughput capacity for near zero fees, which has helped the protocol gain popularity among DeFi and NFT merchants who have been charged to transact on Ethereum.

SpookSwap and SpiritSwap are the two main DEXs in the Fantom network and together currently handle an average transaction volume of $ 95 million over 24 hours.

avalanche

The Avalanche Network is a blockchain protocol that has been gaining traction since the launch in mid-August of the Avalanche Rush Cash Extraction Incentive Program, which includes more than $ 180 million in rewards and incentives designed to attract liquidity to the DeFi ecosystem on Avalanche.

Avalanche price vs protocol turnover. Source: Token Terminal

Since the release of the incentive program in mid-August, protocol revenues and token value for the native AVAX token have increased as users move assets across the chain to engage in the ecosystem. Growing Avalanche DeFi.

According to data from DefiLlama, the main DEXs on Avalanche are Trader Joe (JOE) and Pangolin (PNG), which together currently have a 24-hour average trading volume of $ 355.2 million.

Decentralized perpetual trading

The dYdX decentralized perpetual trading protocol, which exploded in popularity in September following the release of its native DYDX token, also saw an increase in user activity and volumes.

According to data from Token Terminal, daily trading volume on the exchange exploded in the last days of September, from an average of less than $ 2.1 billion to over $ 9 billion on September 27.

Total value locked on dYdX relative to the trading volume. Source: Token Terminal

The regulatory crackdown has been particularly harsh on derivative and leveraged cryptocurrency exchanges like BitMEX and Binance, resulting in increased demand for decentralized options like dYdX and Hegic.

While many in the cryptocurrency ecosystem have lamented China’s crackdown on the crypto industry, their heaviness may have turned out to be a blessing in disguise. This has prompted merchants to move away from centralized exchanges and enter the growing DeFi ecosystem, where the ethics of decentralization and the ability to be your own bank are still available to those looking for it.

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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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