PancakeSwap Launches CLAMM Options Trading on Arbitrum to Bolster DEXs Market Share
Summary:
In an effort to augment the market share of decentralized exchanges (DEXs), PancakeSwap launched a concentrated liquidity automated market maker (CLAMM) for options trading on Arbitrum. The DEX's pseudonymous product manager, Chef Momo, highlights the importance of capital efficiency and composability in this context. The new options are currently active for multiple trading pairs and serve to facilitate intricate options trading for crypto investors while offering new prospects for liquidity providers. PancakeSwap is currently ranked as the tenth-largest DEX.
Greater capital efficiency in decentralized finance, or DeFi, is essential for boosting the market share of decentralized exchanges (DEXs), as emphasized by PancakeSwap. The renowned multichain DEX's pseudonymous product manager, Chef Momo, expressed to Cointelegraph that strategies which enhance capital efficiency and composability are critical in amplifying the market reach of DEXs.
On April 8, PancakeSwap launched a concentrated liquidity automated market maker (CLAMM) for options trading on Arbitrum, via a merger with Stryke’s options trading protocol. Chef Momo asserts that these CLAMM options mark a novel strategy for enabling on-chain liquidity in DeFi, drawing heavily on supply-demand dynamics. The manager also pointed out the immense potential that exploiting such liquidity for option writing offers in enhancing options liquidity on-chain. He stressed that the challenge of limited options liquidity is not confined only to DeFi, but also to centralized finance (CeFi).
As per the announcements, the newly introduced options are now active for ARB/USDC, ETH/USDC, and wBTC/USDC trading pairs. These options primarily serve crypto investors, featuring more detailed options trading facilities, while also providing new prospects for liquidity providers. Chef Momo indicated that v3 pool Liquidity Providers on PancakeSwap can benefit from these options writing facilities, boosting their total returns.
Currently, PancakeSwap is ranked as the 10th largest DEX, with 3.37% and 2.92% market shares on PancakeSwap V2 and PancakeSwap v3 respectively, as suggested by data from CoinMarketCap.
In Chef Momo's opinion, enhancements in capital efficiency and composability in DeFi, much like those achieved via CLAMM, are key in driving growth in DEXs' market share. Options markets rule the world of traditional finance derivatives, however, these markets' existence in the realm of cryptocurrency remains limited. This scenario presents significant opportunities for growth. The value options bring to DeFi is substantial and may include income generation and portfolio hedging among others.
Presently, centralized counterparts substantially surpass DEXs. Binance, the leading CEX, boasts a whopping $26.4 billion in daily trading volume, compared to the $1.44 billion registered within 24 hours by Uniswap, the largest DEX. This information is according to CoinMarketCap.
Binance sees an average of over 21 million visits every week, against 733,930 unique active wallets that Uniswap, the top DEX, saw over the last week, based on DappRadar data. Despite Uniswap's weekly volume reaching $25.5 billion, it still lags behind Binance’s daily trading volume.
Published At
4/10/2024 1:24:16 PM
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