In recent months, China has seen some important events that have shaken the cryptocurrency market and global financial markets. The Evergrande payout crisis in China has caused a turmoil in global stock markets, as well as consistent signals from the US Securities and Exchange Commission (SEC) about the upcoming regulation of stack coins and decentralized finance (DeFi) to indicate market sentiment.
While the Evergrande situation has been somewhat resolved, government attacks on unregulated DeFi platforms and stablecoin transactions are ongoing. This has led to the emergence of Layer 1 protocols established throughout the chain and Layer 2 solutions, which are increasing in volume as traders seek decentralized locations to interact with.
After China announced a ban on all cryptocurrency transactions, major cryptocurrency exchanges such as Huobi have ceased operations in mainland China, according to CryptoQuant CEO Ki Yong Joo.
This led to an outflow of funds from Centralized Asian Exchanges (CEX), and this money was eventually transferred to Decentralized Exchanges (DEX) and the wider Decentralized Finance (DeFi) system.
This phenomenon is particularly interesting and warrants further study given the alleged failure of London’s Ethereum hard fork to cope with volatile gas spending and growing regulatory concerns about the US and China’s response to cryptocurrencies.
Let’s take a look at some of the latest thriving DEX and popular protocols that are on the increase.
According to Dune Analytics, the Ethereum network is by far the most dominant smart contract and hosts the largest and most widely used decentralized exchanges such as Uniswap (UNI) and SushiSwap (SUSHI).
DEX volume monthly. Source: Dune Analytics.
While the latest cryptocurrency ban from China dominated the headlines in the last two weeks of September, it was originally announced on September 3, around the same time that activity on Uniswap increased.
Uniswap trading volume versus total revenue. Source: Token Terminal
As shown in the chart above, the growth in Uniswap activity and volume actually started on Aug 28 and remained above the previous average for the next two weeks.
Uniswap has also benefited from the latest integration with recently released Layer 2 solutions Optimism and Arbitrum, which have contributed to lower transaction costs and faster confirmation times for users on the network.
The Phantom protocol has gained prominence in recent months with the launch of a bridge to the Ethereum network and a 370 million FTM developer incentive program designed to bring new projects to the Phantom ecosystem.
Token Terminal data shows that while the announcement of the incentive program on August 30 gave the first impetus to protocol revenue and token price, only this activity and protocol revenue followed China’s September 3 official announcement of stable growth.
Phantom price versus protocol revenue. Source: Token Terminal
Phantom uses a vectorized non-periodic graph architecture that delivers high throughput for a near-zero fee, which has helped boost the protocol’s popularity among Defi and NFT traders from transactions on Ethereum.
SpookSwap and SpiritSwap are the two highest earning DEXs on the Fantom network, and together they currently process an average of $ 95 million in 24-hour trading volume.
The Avalanche Network is a blockchain protocol that has been gaining traction since the launch of the Avalanche Rush Liquidity Mining Incentive Program in mid-August, which includes over $ 180 million in rewards and incentives designed to bring liquidity into the Avalanche DeFi ecosystem.
Landslide price versus protocol revenue. Source: Token Terminal
Since launching the incentive program in mid-August, protocol revenue and the value of the original AVAX token have skyrocketed as users move assets down the chain to participate in the growing DeFi Avalanche ecosystem.
According to DefiLlama, the best indicators of the avalanche DEX are Trader Joe’s (JOE) and Pangolin (PNG), which currently have an average 24-hour trading volume of $ 355.2 million.
Decentralized eternal trade
The DYdX Decentralized Perpetual Trading Protocols went viral in September after the original DYDX token dropped, resulting in a slight increase in user activity and volume.
According to Token Terminal data, daily trading volume on the stock exchange rose sharply in recent days in September, rising from an average of less than $ 2.1 billion to over $ 9 billion on September 27.