Why Decentralized Trading Has 10Xed in a Few Months – Ep.188

Haseeb Qureshi, managing partner at Dragonfly Capital, and Dan Robinson, research partner at Paradigm, discuss the explosion in decentralized exchange activity on automated market makers from $1 billion earlier this year to more than $10 billion in August. 

• Why trading in automated market makers has 8xed in a few months
• how automated market makers work, and how specific dexes can specialize for the assets being traded on them
• why traders would prefer to trade on a dex vs. a centralized exchange
• how incentivized pools have drawn traders and liquidity 
• why trading on a dex seems can be more appealing than on a centralized exchange
• why trading on dexes now mirrors trading on Binance in 2017
• how “DeFi is the hottest coolest place where people are making a lot of money”
• the difference between the metrics of liquidity, trading volume and total value locked for a dex
• why AMMs are capital inefficient
• what it means that fees paid on Uniswap are about half of those paid on Bitcoin 
• what the purpose of liquidity mining is
• why Haseeb doesn’t think that dexes have network effects and that once professional market makers come in the space, Uniswap will lose market share
• whether users will use DeFi directly through the dexes or through another interface
• why Dan thinks that DeFi is now comparable to financial investment in the 1970s 
• whether or not yield aggregators like yEarn make it harder for AMMs to compete
• what happened with the CRV token launch
• initial dex offerings or initial DeFi offerings, like the UMA token launch
• whether, because of the high fees on Ethereum and the how long its transition to Ethereum 2.0 will take, DeFi activity could move to another blockchain such as Solana
• where DeFi will go over the next few years

 

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Episode links: 

Haseeb Qureshi: https://twitter.com/hosseeb

Dan Robinson: https://twitter.com/danrobinson

 

Haseeb’s post on the rise of AMMs: https://medium.com/dragonfly-research/what-explains-the-rise-of-amms-7d008af1c399

 

Haseeb’s post on how Uniswap could be un-bundled: https://medium.com/dragonfly-research/unbundling-uniswap-the-future-of-on-chain-market-making-1c7d6948d570

 

Dex volume: https://defiprime.com/dex-volume

 

Trading volume on centralized exchanges: https://www.theblockcrypto.com/genesis/74539/july-by-the-numbers-a-look-at-crypto-exchange-volumes-open-interest-and-miner-revenue

 

Incentivized pools: https://pools.fyi/#/?tag=incentivized

 

Top dexes by trading volume: https://www.coingecko.com/en/dex

 

Ethereum transaction fees: https://bitinfocharts.com/comparison/ethereum-transactionfees.html 

 

Uniswap website visits 15x in July: https://messari.io/article/uniswap-total-website-visits-grew-15x-in-july

 

Website traffic to DeFi platforms explodes in July: https://www.theblockcrypto.com/post/74231/defi-platforms-web-traffic-july

 

Fees paid to various crypto projects: https://cryptofees.info

 

Curve reaches $1 billion in TVL: https://www.theblockcrypto.com/linked/75014/curve-becomes-third-defi-protocol-to-hit-1-billion-in-total-value-locked

 

The Block on dex aggregators: https://www.theblockcrypto.com/genesis/69468/dex-aggregators-user-experience

 

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• Source: https://unchainedpodcast.com/why-decentralized-trading-has-10xed-in-a-few-months/