DEX bailed out after China bans cryptocurrencies. There have been several major developments from China in the past few months that have rocked the global crypto and financial markets. China’s Evergrande debt repayment crisis has sent shock waves through global equity markets, as has the consistent signal from the US Securities and Exchange Commission (SEC) to regulate, and the upcoming stablecoins and decentralized finance (DeFi) continue to affect market sentiment.
While the Evergrande situation has resolved itself somewhat, the government’s crackdown on unregulated DeFi platforms and stablecoin transactions continues for the time being. This has resulted in cross-chain Layer-One protocols and Layer-2 solutions that see increased transaction volume as merchants look for decentralized places to interact.
According to CryptoQuant CEO Ki Young Ju, major crypto exchanges like Huobi suspended services for accounts in mainland China after China announced a ban on all crypto exchanges.
This set off the flow of money from centralized exchanges (CEXs) based in Asia, and these funds were eventually deposited into decentralized exchanges (DEXs) and financial ecosystems.
Off-chain transactions spiked after Huobi announced it would freeze existing accounts in mainland China.
Ironically, this timing leads to decentralization. pic.twitter.com/EKpkHIdSv0
– Ki Young Ju (@ki_young_ju) September 29, 2021
This phenomenon is particularly interesting and requires further investigation as it is believed that Ethereum’s London hard fork failed to address the intolerable gas fees and regulatory concerns surrounding the United States and China’s response to cryptocurrencies.
Let’s take a look at some of the recent thriving DEXs and popular protocols that have seen cash flow spikes.
The Ethereum network is by far the most dominant smart contract and is home to the largest and most widely used decentralized exchanges such as Uniswap (UNI) and SushiSwap (SUSHI), according to data from Dune Analytics.
While China’s recent crypto ban dominated the headlines for the last two weeks of September, the original announcement was released on September 3, around the same time it was active on the internet.
As shown in the graph above, Uniswap activity and trading volume actually started on August 28th and will remain above the previous average for the next several weeks.
Uniswap has also benefited from the recent integration with the newly released Layer 2 solutions Optimism and Arbitrum, reducing transaction costs and accelerating confirmation times for users on the network.
The Fantom protocol has grown in prominence in recent months thanks to the launch of a bridge to the Ethereum network and a $ 370 million FTM developer incentive program to attract new projects to the ecosystem.
Data from Token Terminal shows that while the announcement of the incentive program on August 30th caused an initial spike in protocol revenues and token prices, after the government announcement came from China on September 3rd, the new protocol operations and revenues are truly being experienced. a sustainable increase.
Fantom uses a directed ring graph architecture that enables high throughput with near zero fees, which has helped make the protocol increasingly popular with DeFi and NFT traders who were valued in transactions on Ethereum.
SpookSwap and SpiritSwap are the two top DEXs in the Fantom network and together currently process an average 24-hour trading volume of 95 million US dollars.
The Avalanche Network is a blockchain protocol that has grown in prominence since the Avalanche Rush liquidity mining incentive program was launched in mid-August, which includes over $ 180 million worth of rewards and incentives designed to do so To lure liquidity into the DeFi ecosystem on Avalanche.
Since the incentive program was released in mid-August, log revenue and token value for AVAX-native tokens have increased as users transfer assets across chains to participate in the growing DeFi ecosystem.
According to DefiLlama data, the top DEXs on Avalanche Trader Joe (JOE) and Pangolin (PNG), which together currently have an average 24-hour trading volume of $ 355.2 million.
Decentralized perpetual transaction
The decentralized perpetual trading protocol dYdX, which exploded in September following the airdrop of its native DYDX token, also saw an increase in user activity and volume.
According to Token Terminal, the 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.
Regulatory crackdown has been particularly tough on derivatives and leveraged crypto exchanges like BitMEX and Binance, which has led to increased demand for decentralized options like dYdX and Hegic.
While many in China’s crypto ecosystem lament the crackdown on the crypto sector, its aggressiveness can actually be a hidden blessing. It has spurred traders to venture away from centralized exchanges and into the rapidly growing DeFi ecosystem, where decentralization and the ability to “be your own bank” still exist.
Would you like more information about trading and investing in the cryptocurrency market?