Decentralized exchanges receive an influx of Chinese investors, activity soars

  • Decentralized exchanges attract incoming traffic from Chinese investors as the crypto crackdown intensifies.
  • Influx causes trade volumes on dYdX to surpass Coinbase’ for the first time in history.

Top decentralized exchanges have been recording their highest performances in trading volumes and token price in the last few days, as Chinese investors flock in large numbers to escape government scrutiny on centralized exchanges.

Some Dexes have surpassed the trading volume of popular centralized crypto exchanges likes Coinbase.The price of DYDX, the native token of one of the earliest dexes dYdX, has soared nearly 40 percent to its historically best performance of $22.17, CoinGecko data shows. 

Dexes use smart contracts to process transactions on a peer-to-peer basis using smart contracts, unlike centralized exchanges, which depend on a third party to establish trust on both sides of the transaction. 

Smart contracts are programs that execute transactions automatically once all the pre-specified conditions have been met. They were designed to enable the anonymous, unlimited, and trustless exchange of value anywhere in the world. Dexes are the true representation of a decentralized economy. Most dexes only provide users with a platform to swap tokens conveniently and fast, while others have added extra functionalities like yield farming and staking.

However, they are currently more technical for the average user to comprehend and provide less liquidity than centralized exchanges. Dexes like Paxful and LocalCryptos have made significant efforts to simplify their user interfaces.

dYdX beats Coinbase trade volumes

 Antonio Juliano, founder of dxdy and former Coinbase employee, said that it’s remarkable for dydx, to outperform Coinbase.

5 years ago I left @Coinbase and eventually founded dYdX. Today for the first time, @dydxprotocol is doing more trade volume than coinbase.

The volumes rose even higher, surpassing $3 billion on the spot markets and $6.3 billion in derivatives. According to Antonio, the exchange’s team of 10 people is now looking to expand to handle the incoming traffic.

Other popular Dexes recording higher trading volumes include Uniswap, SushiSwap at 36 percent and 29 percent, respectively. The  notable volume transfer into dexes was preceeded by a massive sell-off of USDT led to an exchange rate of below 6.2 Yuan per USDT (1.5 percent negative premium) on exchanges like Huobi, OKex, and Binance.

 Crypto crackdown on centralized exchanges lead to the rise of Dexes

Chinese investors are unraveled by the crackdown, according to local reports. Instead, they are now encouraging the mastery of dexes to evade ongoing restrictions on cryptocurrencies. Reporter Will Wu said that dYdX and the DeFi space expect an even bigger number of Chinese traders who are also disbanding WeChat groups and joining the Telegram community.

A large number of Chinese users will flood into the DeFi world, and the number of users of MetaMask and dYdX will greatly increase. All Chinese communities are discussing how to learn defi.

Bitcoin maximalist and techpreneur Anthony Pompliano also thinks that decentralization is the future.

The last ten years were defined be centralized infrastructure in the bitcoin and crypto industry. The next years will be defined by decentralized infrastructure.

Additionally, dexes could expect more volume from Singapore after Binance announced the closure of its fiat deposit, crypto trading, liquid swap, and fiat-crypto trading services due to regulatory restrictions.

About Author

I am a finance journalist and inspiring technopreneur with three years of experience in blockchain/crypto info dissemination. I write to inform both existing and potential crypto technology adopters with an added commitment to contribute to the advanced realization of blockchain in real-life use cases.

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