A recent survey by cryptocurrency data collector CryptoCompare found that central exchange operators do not see a threat in the emergence of decentralized marketplaces such as Uniswap, despite the growth in volume and activity in the DeFi space.
In its September stock exchange review, CryptoCompare asked 26 of the top places in the room how likely it is that DEX liquidity will surpass it on centralized exchanges within two years. 70% of respondents said that decentralized stock exchanges will not receive central volume due to lack of liquidity.
Only 7.7% of delegates considered this a likely event, while 19.2% remained neutral. As shown below, 34.6% of respondents think this is unlikely and 38.5% think it is very unlikely.
Is DeFi still a diamond?
It’s easy to dismiss DeFi as another short-lived cryptocurrency trend that has been perpetuated by money-hungry founders and spurred on by gullible investors. This sector is similar to the ICO Mania 2017 sector for several reasons.
There are unaudited contracts containing hundreds of millions of dollars, unrealistic profits for platforms that seem like little more than steampunk goods, and a lot of FOMO. Ever since DeFi became a buzzword, there have been a slew of scam projects and dramatic developer programs that have sparked a big wave in cryptomedia.
So the question is, if most highly speculative token projects spike overnight for no reason and then suddenly crash the next day and suddenly stop, why do investors keep investing in DeFi?
The main reason is that the bonuses offered by the liquidity protocols have brought in incredible amounts to farmers. As higher APYs attract more returning users, decentralized exchanges like Uniswap and Curve can look forward to increased liquidity, and as long as this cycle remains in place, DeFi trading volume is expected to grow.
Is it time to get serious about DeFi?
However, bonuses usually come from trading commissions. This means that the higher the volume, the more profit for exchanges and liquidity providers.
Active daily DEX users
Active daily DEX users. Source: data on digital assets.
While Cointelegraph and Digital Assets Data show that the number of active users on decentralized exchanges has been steadily declining since September, the total value locked down on DeFi platforms persists.
Flipside Crypto, an onchain computing resource, recently discovered that around $ 300 million per day are being sent to DeFi apps in Ether and other ERC20 tokens.
That’s almost double that of centralized exchanges, with only 70% of the $ 300 million going to Uniswap. It’s also worth noting that Uniswap’s trading volumes in September were marred several times by leading central exchanges such as Coinbase.
According to a CryptoCompare poll, central exchange officials believe DEX privacy is the most important reason traders use these exchanges.
This is partly true, but some of these projects also address some of the most difficult problems in the digital asset world.
For example, Curve provides a way for users to exchange accumulated currencies with very little slippage due to their liquidity pools, while Pickle Finance seeks to stabilize coin accumulation by artificially increasing supply and demand through flexible incentive mechanisms.
There are several similar projects, and their existence shows that DeFi is attractive not only for the good of the individual, but also for society.
Truth be told, Central Exchanges feel threatened by DeFi
Some industry leaders chose not to take DeFi seriously when they chalked it up to another passing fad, but Binance chairman Changpeng Zhao thinks otherwise. Czechoslovakia recently told CoinDesk that it expects DeFi to “crash” the exchange, which explains why the exchange made a serious investment in DeFi so late.
While respondents are now effectively ignoring the volume of decentralized stock trading, this is an interesting decision as 40% of the exchanges surveyed admit they are building or planning to build a DEX in the future.
This is a clear sign that central exchanges already view DeFi as a major threat to their current business models.