Opinion: DEX trading volumes are a total sham
Record trading volumes on decentralized exchanges (DEXs) are a temporary phenomenon. Their creators should focus not only on incentives in the form of governance tokens but also on improving user interaction. This is the view of Sam Bankman-Fried, head of the FTX exchange and Alameda Research, writes DeCrypt
\n
In Bankman-Fried’s view, presented at the LA Blockchain Summit, these volumes will fade as the excessive incentives to use DEXs are exhausted.
\n
He meant \”yield farming\”. It involves earning rewards in the protocol’s native tokens, including for providing liquidity.
\n
The phenomenon spread widely after the lending project Compound distributed governance tokens COMP in June. Since then, \”everyone else started copying it\”, Bankman-Fried noted.
\n
The head of FTX is convinced that this bullish run can be sustained only by endless issuance of such tokens to retain liquidity providers on the platforms. Sharp decline in the prices of DeFi protocol tokens in September could be a signal that his assumptions are coming true.
\n
Bankman-Fried says that for DeFi’s further development, better interaction with users is required. Among possible options, the expert sees moving to a faster blockchain or building software on top of an existing blockchain to address the network’s scalability issues.
\n
Also taking part in the conference, Alex Wearn, co-founder and chief executive of non-custodial trading platform IDEX, said that users are already seeing these changes.
\n
\”DEXs are becoming easier to use, built on faster blockchains, and safer,\” he said.
\n
ForkLog previously reported on the launch of DEX Zilswap on the Zilliqa blockchain and the beta version of a completely redesigned platform EOSfinex on EOS.
\n
Bankman-Fried is intimately familiar with DeFi protocols from the inside.
\n
In July, FTX announced the launch of the Serum DEX on Solana. Sam Bankman-Fried said at the time that this choice was driven by the speed and cheapness of transactions on this blockchain.
\n
In early September, Bankman-Fried took the reins of SushiSwap after the scandal with the Uniswap fork administrator \”Chef Nomi\” selling half of the developers’ fund in native SUSHI tokens.
\n
\n
\n
After SushiSwap reduced rewards for liquidity providers by a factor of ten, the amount of assets locked in this DEX fell by 37% over the next two days fell.
\n
Just days earlier, Uniswap lost more than 70% of its liquidity due to asset migrations to SushiSwap. The trigger was the distribution of rewards among LPs who supported the project prior to the launch of the automated market maker in SUSHI.
\n
SushiSwap’s success and the liquidity migration spurred Uniswap to launch its governance token UNI.
\n
In September, DEX turnover reached approximately $23.5 billion. Since June, when the figure stood at $1.6 billion, it has shown multi-fold monthly growth. In August, Uniswap’s daily turnover first surpassed Coinbase, the largest US cryptocurrency exchange.
\n
At the end of September, ForkLog held an online conference, \”DeFi: A User’s Guide.\” Its participants agreed that DeFi tokens ceased to be a measure of a project’s success.
\n
Other conclusions from the speakers can be read at the link.
\n
Follow ForkLog’s news on Facebook!
Рассылки ForkLog: держите руку на пульсе биткоин-индустрии!