The month of September has been a landmark period in the DeFi industry with the groundbreaking sector, causing excitement among the decentralization lovers. During September, the top DeFi protocol, Uniswap, processed assets worth $15.3 billion, exceeding the monthly volume of major crypto exchange, Coinbase.
According to data shared by Dune Analytics, major U.S.-based cryptocurrency exchange firm, Coinbase, processed assets worth $13.6 billion over the same period. There are two key factors responsible for the rapid surge in Uniswap’s monthly volume. In the first place, the swift rise of decentralized finance and the growing prominence of yield farming have led to dexs’ fast growth.
The advent of decentralized finance
In the second place, Uniswap’s growth was contributed by the deployment of its governance token, UNI, which created excitement, inducing delight on the platform. The month of June ushered in the DeFi craze with the launch of Compound’s governance tokens, COMP, initiating the prodigy. The procedure of obtaining governance tokens on decentralized exchanges is relatively straightforward; users stake other digital currencies such as ethereum to farm the tokens.
After the successful farming of DeFi governance tokens, users most often preserve them until they are ready to be sold on a regulated exchange. However, at times, governance tokens’ market capitalization is inadequate to meet the minimum required for exchange listing. Major exchange platforms explore several elements before adding support for tokens. Some of the standards include the fluidness, background, and developer activity of a given token.
Such standards are almost impossible for new DeFi tokens to fulfill. As such, Uniswap became the one-stop platform to trade governance tokens. As the total value locked in DeFi liquidity pools swelled, the trading volume on Uniswap decentralized exchange also expanded.
Is the landmark Uniswap monthly volume a one-time thing?
The trading volume on Uniswap first eclipsed Coinbase pro two months ago. From that moment henceforth, Uniswap has continued to challenge the major American exchange.
Uniswap managed to maintain the steadily high volumes regardless of the substantial drop in yield farming and UNI tokens’ hysteria. As such, the growing number of DEXs with significant trading volumes indicates that decentralized finance is here to stay.
During the past couple of weeks, DeFi tokens declined in value, and yield farming on DeFi platforms also reduced considerably. However, Dune Analytics claims that the trading volumes on DEXs during September crashed the previous landmarks. According to Ethhub founder, Anthony Sassano, the high volume represents the confidence investors have with ethereum.