Exchange Volume of Defi Tokens on Decline; $MKR $UMA staking on Rise

Prashant Jha
March 18, 2021
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Defi

The Defi craze of 2020 has continued this year as well, the total value locked in various Defi protocols breached $45 billion for the first time. At present, the volume of defi tokens on centralized exchanges compared to its total supply is below 10% for the likes of $UMA, $MKR, $COMP, $UNI, and $SNX. While a few including $AAVE and $BAT has over 15% of its supply on centralized exchanges which is considered bearish for a defi token.

Source: CryptoQuant

The ratio of exchange volume of these tokens compared to total supply suggest how much the token is being used for various purposes such as staking, institutional buying, and DEX user. A percentage below 5 is considered healthy for a defi token. As per the current volumes $UMA, $MKR, and $COMP look bullish while $BAT with over 15% exchange supply looks bearish.

For $MKR, exchange holdings are decreasing, and fewer tokens on exchanges compared to the total supply. For $BAT, exchange holdings are increasing meaning holders are transferring it for selling on centralized exchanges.

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The Changing Defi Dynamics

The Defi ecosystem works on top of the Ethereum network primarily dealing in ERC-20 tokens or any other Ethereum based token protocol. However, during this bull season the growing demand for ETH and rising popularity of Defi has made the Ethereum network quite sluggish with high gas fees. The rising gas fee in the recent past has made many Defi protocols barely usable as even a simple swap was costing on average $4-$5.

In the wake of growing scalability issues on the Ethereum network, several alternatives have gained a lot of traction in the recent past especially Binance Smart Chain (BSC). BSC has risen as the go-to option for most of the Defi projects and even spot traders as it offers a very lower transaction fee and mimics ethereum network’s functionality.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
An engineering graduate, Prashant focuses on UK and Indian markets. As a crypto-journalist, his interests lie in blockchain technology adoption across emerging economies.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.