The latest data from Messari revealed that the third quarter saw the space flooded with increased capital inflow and attention. It was decentralized exchanges [DEXs] that saw a meteoric rise. From trading in the single-digit millions at the beginning of the year to surpassing all the way to $1 billion in a single day even exceeding a few centralized players, DEXs have once and rose to prominence with some serious numbers this quarter.
Best Figures for DEXs in Q3
This was primarily triggered due to certain projects that were spun up in just a matter of days and locking up the nine-figures worth of value as mercenary capital freely flowed to the next highest yielding farm. According to Messari, “it was pure chaos”.
The report also mentioned,
“People were making money hand over fist riding out the farming trend and speculating on governance tokens. But all good things must come to an end. In the last month, DeFi has seen a nasty correction with most tokens down over 50% from recent high, helping to quell the irrational exuberance. While sentiment has taken a quick 180 and it may seem like the sky is falling, the space as a whole is still up on the quarter.”
Modest Performance by Tokens
The DeFi asset universe has greatly expanded over the past couple of months in terms of their respective price performance. While several tokens bled, the exception was found to be Yearn.Finance, YFI which saw an outsized return of 2911% along with Uniswap’s UNI which saw a moderate price appreciation of 43%. Sushiswap’s SUSHI, on the other hand, declined by 49%. According to Messari, most of the tokens did not perform well despite the craze was because they have been “farmed and dumped”.
The increased volatility along with farmers scrambling to rotate crops led to a proliferation in on-chain trading can be attributed to the intensifying activity in DEXs. The assets being traded were generally put to “productive use cases” in either Automated Market Maker [AMM] or lending pools, the report specified. What further bolstered the increased traction was the fact that most of these governance tokens were first made available on DEXs. Even when these tokens were listed on centralized exchanges [CEXs], most of the liquidity was found on their decentralized counterparts.
It is important to note that this trend first began in the second quarter of the year. During this time, the average daily volumes increased 500% to $80 million. By the end of the quarter, DEXs accounted for 13.6% of volume across all exchanges, an increase of 2.8% at the beginning of it. However, the report also revealed that the trading volumes have since downsized from September highs but remain 10x what they were at the beginning of the third quarter.