Data from Dune Analytics shows that in the month of September Uniswap decentralized exchange processed $15.371 billion in volume. In the same period, reports indicate that Coinbase processed $13.6 billion.
Monthly decentralized exchange volume. Source: Dune Analytics
The significant spike in Uniswap’s volume can be attributed to two major factors. First, the explosive growth of decentralized finance (DeFi) and yield farming of governance tokens caused decentralized exchanges to thrive. Second, the launch of Uniswap’s governance token UNI led to a frenzy on the platform.
June marked the start of a frenzy in DeFi governance tokens, with Compound’s COMP token kickstarting the phenomenon.
The process is relatively simple: DeFi users “farm” new governance tokens by staking various cryptocurrencies, such as Ether (ETH).
DeFi protocols that release their underlying governance tokens in a decentralized manner distribute them over time to users who stake.
Once users successfully farm the new tokens, they typically hold them until they can be sold at centralized exchanges but sometimes the token’s market cap is too small.
Top cryptocurrency exchanges have to consider various factors before listing tokens. Some of the criteria include liquidity, track record, and developer activity. For new governance tokens or DeFi-related cryptocurrencies, it is nearly impossible to meet those requirements.
Hence, Uniswap eventually evolved into the go-to platform to trade DeFi tokens and as the total value locked in DeFi surged it intensified the growth of Uniswap’s volume.Is DEX volume a one-off or a trend?
Uniswap first surpassed Coinbase Pro in daily volume on Aug. 30. Since then, it has continuously remained competitive with the top U.S. exchange. In late August Uniswap creator Hayden Adams said:“Wow, Uniswap 24hr trading volume is higher than Coinbase for the first time ever. Uniswap: $426M, Coinbase: $348M Har...