Entering a New Paradigm - The Daily Gwei #63
The times they are a-changin.
Decentralized exchange volumes have absolutely exploded over the last few days and have done more than $1 billion worth of volume over the last 24 hours alone ($4bil for the week)! This incredible growth is driving another phenomenon - centralized exchanges (CEXs) are now the lagging party when it comes to listing a new Ethereum-based asset.
The fact that Binance (still the largest CEX in crypto) is actually playing catch-up with listing “DeFi tokens” is mind-boggling. It used to be that you’d buy a token and hope that a CEX would list it so it would “pump”. That still happens of course, but because DEX usage has grown so much and volumes are so high, a token doesn’t actually require a CEX listing for sustained price appreciation and deep liquidity. This is causing CEXs to “fomo in” when choosing which tokens to list because they don’t want to miss out on those sweet trading fees.
This is really the first time in crypto history that something like this has played out. DEX’s have existed on Ethereum for quite a while (EtherDelta anyone?) but never have they been used this much and never have they had a liquidity/volume lead on CEXs. Yield farming is obviously what’s adding so much fuel to this new token boom fire and I think this will only continue - I kind of view yield farming as this bull cycles version of ICOs (in terms of general economic activity and capital raised).
I expect this to be a trend for a while because new tokens are popping up every day and it’s very easy for them to be “listed” on a number of different DEXs on Ethereum (as listing is permission-less). This allows these tokens to attract liquidity quickly and start appreciating in price which naturally builds a community of people around it. This can literally happen in a matter of days which means CEXs don’t even have the time to do due diligence on a project/token before it’s already done a 10x and has 10’s of millions of dollars worth of trading volume a day.
We’re generally entering uncharted territory in Ethereum/DeFi and even crypto these days - so many things happening that defy what we’re used to in this industry. I mean, who could of picked that yield farming would be the thing to kick off the new bull market? It’s just insane how fast this entire space moves and how quickly our fundamental understanding of things can change.
Though, this is what makes it all so exciting!
Have a great day everyone,
All information presented above is for educational purposes only and should not be taken as investment advice.