Unraveling the Evolution and Future of Decentralized Exchanges: Cointelegraph Research Report
Summary:
Cointelegraph Research presents its latest report on decentralized exchanges (DEXs), showcasing the evolution of DEX technology and its impact on traders and liquidity providers. The report highlights the need for advancements in the automated market maker model, blockchain competition, and smart routing. While top protocols Dodo and Perpetual Protocol exhibit higher liquidity turnover ratios, conventional DEXs still grapple with scattered liquidity, a problem being addressed by aggregators. The report has been compiled in collaboration with Native Labs, Helix Markets, QuickSwap, and Velvet Capital.
In recent years, there has been a noticeable evolution in the technology behind decentralized exchanges (DEXs). This improvement has led to the creation of new tools and strategies that help traders and liquidity suppliers counter the negative effects of price slippage and non-permanent damages. Simultaneously, solutions for smart routing have been addressing the problem of scattered liquidity. However, these developments have not yet propelled this market segment to exceed the user engagement levels observed before Terra's existence.
The latest report by Cointelegraph Research, titled "DEXscape: Scaling, Innovating, Aggregating", provides a detailed examination of the developing trends within the DEX industry, and gives a critical forecast for its future. This report sheds light on factors such as advancements in the automated market maker (AMM) model, competition among various blockchains, the significance of zero-knowledge proofs and the role of smart routing. It also explores how these factors can collectively transform the industry, further enhancing the experience of digital traders.
Often considered the key performance indicator for capital efficiency within DEXs, the 24-hour liquidity turnover ratio (LTR) - a metric that compares trade volumes with the total value locked - was evaluated for several popular DEXs using different AMM models. Leading protocols like Dodo and Perpetual Protocol, which employ proactive market maker and virtual automated market maker models, registered the top LTRs, indicating a higher level of activity compared to DEXs utilizing alternative models.
Still, conventional DEXs face the challenge of scattered liquidity, which is being addressed by several aggregators that merge different DEXs and liquidity pools using various technologies identified in the report. The rising popularity of these aggregators is irrefutable, accounting for more than 20% of decentralized trade volume.
In association with Native Labs, Helix Markets, QuickSwap, and Velvet Capital - all significant contributors to the DEX space - Cointelegraph Research has assembled a comprehensive report offering an extensive analysis of the DEX industry's current innovations and trends.
The Cointelegraph Research division consists of leading academic thinkers with well-rounded technical backgrounds and a wealth of practical experience. Committed to delivering accurate, insightful content that meets the industry's highest information standards, the team combines decades of experience in various fields such as traditional finance, business, engineering, and research. Their unique blend of talents has masterfully culminated in the most recent Investor Insights Report.
This material is presented for informational reasons, and does not provide specific recommendations or suggestions for individuals or for any particular financial or investment products.
Published At
3/22/2024 7:14:00 PM
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