The trading volume on decentralized exchanges, or DEXs, reached $42.6 billion during Q3 2020, marking an increase of 1,132% on the previous quarter, according to a recent industry report from TokenInsight.
However, October saw figures pull back a little from September highs, as Bitcoin (BTC) prices started to pump, re-capturing traders’ attention following the previous few months’ decentralized finance, or DeFi, boom.
Volumes in July alone reached $5 billion, which was up one third on the entire Q2 figure. Monthly volumes continued to rise throughout Q3, posting an average monthly increase of over 140%.
The share of volume between an ever-increasing number of competing DEX was still fairly concentrated, with up to 50% of trading occurring on UniSwap, and almost three quarters accounted for by the top three exchanges.
However, eight decentralized exchanges topped $1 billion of trading volume in Q3, compared to zero in the previous quarter.
One of the drivers the report posits for this increase in volume is the “wealth effect” brought by DEXs, which have opened up a “market between primary and secondary.”
According to TokenInsight, this can give the average user access to high-quality projects before they percolate through to secondary markets, and was most noticeably seen during the DeFi craze.
Additionally, the rise of DEX alters the relationship between token projects and centralized exchanges. This was previously heavily skewed in favor of the exchanges, which could demand large payments to list tokens.
DEX provides a market outside of this, in which projects can thrive without major centralized exchange support.
However, even with the reported Q3 gains in trading volumes on DEX, they still only account for 1.24% of the total spot market transactions for this period.