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DeFi explosion – Uniswap above Coinbase Pro in daily volume

Photo of: Nathan VDH
by Nathan VDH

These last few months have witnessed a boom in the demand for decentralized finance projects – DeFi. However, few could have predicted that such demand would grow as fast as it has done overtaking established trading giant Coinbase in the process in daily trading volume.

Tweet of Hayden Adams, founder of Uniswap

Uniswap is the most popular decentralized exchange (DEX) based on the Ethereum protocol. On August 30, it surpassed Coinbase to cap out an excellent month which has seen trading volume explode. It’s the DeFi market’s growth in general and the many new exciting projects available that have convinced many investors, from crypto enthusiasts to organizations, to move their business on decentralized exchanges.

Source: Uniswap website on August 31st

AS we can see in this graph, the exchange has only been properly active for the last two months or so and growth to these heights is nothing short of impressive. The total amount of liquidity locked on the DEX is now up to $1.17 billion. This has been accompanied by the rise of many governance tokens linked to these exchanges which are automatically accepted on the DEX without the need for approval of any central authority.

This is both the beauty and the issue of such exchanges, while there is no central entity which accepts or refuses projects and tokens, the responsibility of gathering and verifying information on various tokens goes to the individual user. Yes, he may be fooled, but at least he is responsible for his actions.

The meteorically rising yearn.finance token was released first on Uniswap and due to its popularity has been added since then on many centralized exchange platforms such as Poloniex and Binance.

For now, Uniswap has a major advantage due to the speed at which tokens can be listed as available to purchase and sell. It remains to be seen whether, once the centralized big names catch up, DEX such as Uniswap will retain their impressive popularity.

Amidst this surging popularity, Ethereum is receiving an impressive boost as well. The daily transaction volume of Ethereum has received quite a boost and the price of Ethereum seems to have steadily increased due to the abundance of DeFi projects using smart contracts and the Ethereum platform.

One question remain, is this growth sustainable? While the momentum is very strong, the growth of the DeFi market, if it is to continue, will ultimately have to be sustained by solid projects which deliver to the investors. It seems to early to predict anything but the signs are very promising.