Exchanges (DEX) – Weekly fundamentals #69

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A walkthrough of the most interesting charts and trends in crypto, with a focus on key business drivers and protocol fundamentals.

This week’s newsletter focuses on the exchanges (DEX) market sector, which has a designated dashboard on Token Terminal. Let’s dig in!

Decentralized exchanges are smart contract-based exchanges that allow for permissionless trading of assets globally.


  • Decentralized exchanges (DEXs) are smart contract-based platforms that enable the trading of digital assets without the need for centralized intermediaries. Currently, most DEXs work as automated market makers (AMM). Instead of relying on traditional bid-and-ask orders, AMMs use liquidity pools and mathematical formulas to determine asset prices. Alternative DEX mechanisms include order books, aggregators, and hybrid models combining various approaches. Typically, DEXs generate revenue by taking a cut of the trading fees paid by traders.
  • DEXs remove the need for central authorities to control and oversee asset exchange. Traditional financial transactions lack transparency and must rely on centralized intermediaries. In contrast, transactions on DEXs execute according to transparent rules set by smart contracts and provide complete visibility over the exchange process. As a result, DEXs reduce counterparty risk and increase execution guarantees.
  • DEXs offer a more inclusive and accessible trading environment. DEXs allow users to trade without the need for extensive KYC/AML procedures or geographical restrictions. DEXs promote financial inclusion by empowering individuals to participate in global capital markets.


The daily trading volume and total value locked (TVL) over the past 180 days for the top projects in the exchanges (DEX) market sector are visualized below.

Scope of analysis

The exchanges dashboard currently features 42 projects within the exchanges (DEX) market sector. By our estimate, these projects represent over 70% of the total value locked (TVL) and more than 60% of the trading volume within the market sector. Thus, it is important to note that the dashboard can only give an indicative analysis of the market sector.

  • Trading volume and TVL have remained relatively constant over the past 180 days, with mid-March being an exception. DEX trading volumes peaked at $16.2b on March 11th, 2023, more than eight times the daily average of $2.0b over the last 180 days. DEX TVL also declined by 14% from $14.0b to $12.1b between March 9th and 12th.
  • The USDC depeg was the main driver behind the drastic change in trading volumes and TVL in mid-March. Circle’s USD coin (USDC) lost its peg to the US dollar on March 10th, following the announcement that Circle had up to $3.3 billion in exposure to the struggling Silicon Valley Bank. This resulted in increased DEX trading volume as USDC holders pivoted to other tokens. The TVL in DEXs also dropped sharply, in part due to the decreased value of USDC held in DEX liquidity pools. For example, the USDC-WETH trading pair on Uniswap had more than $450m liquidity on March 9th but had dropped to only $300m by March 12th. On the other hand, TVL for the WETH-USDT trading pair remained relatively constant over the same period.
  • Macroeconomics and regulatory actions heavily influence the DEX market sector and the crypto industry as a whole. These external factors can lead to abrupt changes in trading volumes and the value of liquidity positions held by users. Investors and market participants should keep these influences in mind when analyzing market dynamics and making financial decisions.

DEX trading volume is shifting to chains outside of Ethereum

  • Since the beginning of 2023, the share of DEX trading volume on Ethereum has decreased from 72% to 54% due to growth on Arbitrum. Arbitrum has grown from facilitating 3.3% to 23.3% of the total DEX trading volume over the same time period. Meanwhile, the share of trading volume on Polygon, Optimism, and BNB Chain has remained relatively constant.
  • Arbitrum’s share of DEX trading volume peaked when the ARB token launched on March 23rd, 2023. On the day of the launch, ARB trading volume on Uniswap, the leading exchange on Arbitrum, exceeded $480m. The spike was most likely driven by users converting their ARB airdrop rewards to other tokens following the token airdrop. Although DEX trading volume on Arbitrum has decreased slightly since late March, Arbitrum remains the second-largest chain when measured by DEX trading volume after Ethereum.
  • Increased user demand for token trading on Arbitrum is leading to new DEX launches. While Uniswap remains the current market leader on Arbitrum with over 3.38m transactions over the past 90 days, newer DEXs native to Arbitrum are emerging as competitors. A prominent example is Camelot, a relatively new DEX on Arbitrum that has facilitated close to 1m transactions in the past 90 days.

Case analysis: High-profile DEXs expanding outside their origin chains

  • Uniswap and Trader Joe have successfully expanded outside of the chain of their launch. Simultaneously, PancakeSwap struggles to gain momentum on Ethereum. While Uniswap long remained on Ethereum, PancakeSwap on BNB Chain, and Trader Joe on Avalanche C-Chain, all three have later expanded to other chains. Currently, 40% of Uniswap’s and Trader Joe's trading volume is attributed to chains outside of Ethereum and Avalanche C-Chain. In contrast, trading volume on PancakeSwap outside of BNB Chain only covers 4.2% of the total PancakeSwap trading volume.
  • Expansion to new chains has been a driver behind the growth of daily active users for Uniswap and Trader Joe. The majority of Uniswap’s growth is a result of new traders on Polygon and Arbitrum, while Trader Joe’s active users have also been growing on Arbitrum.
  • By expanding to Arbitrum, Trader Joe captures users who make larger trades. 40% of Trader Joe’s trading volume and 25% of active users come from activity on Arbitrum. Increased trading volume per user indicates that Trader Joe is able to reach traders with a larger average trade size on Arbitrum than on Avalanche C-Chain.
  • The DEX market sector on Ethereum has become more competitive and challenging for new entrants. A comparison of the DEXs above indicates that expansion should be directed to chains that are growing in market share, such as Arbitrum.


Some interesting trends for projects in the exchanges (DEX) market sector are visualized below.

  • Trader Joe, Quickswap, KyberSwap, and ParaSwap are the best-performing projects in the DEX market sector based on growth in trading volumes over the past 180 days. Over the past 180 days, trading volumes have grown by 237.2%, 91.8%, 61.8%, and 38.6% on Trader Joe, KyberSwap, QuickSwap, and ParaSwap, respectively.
  • Trader Joe has tripled its number of daily active users over the past 180 days, surpassing competing platforms such as QuickSwap, KyberSwap, and ParaSwap. QuickSwap, KyberSwap, ParaSwap, and Trader Joe had similar trading volumes and trends over the past 180 days. Daily active users also remained on similar levels until late March when Trader Joe's daily active user count nearly tripled.
  • The growth in Trader Joe's active user base can mainly be attributed to the release of the new Liquidity Book solutions and an expansion to Arbitrum. Trader Joe has released their new Liquidity Book solutions (v2 and v2.1), which improve token pricing and reduce slippage. Trader Joe's v2.1 also automatically reinvests fees earned by liquidity providers back into their liquidity positions, which boosts user experience. These new version launches were also boosted by a general increase in activity on the Avalanche C-Chain and Arbitrum.
  • We anticipate that future DEX development will prioritize improving token pricing, slippage, and user experience. We expect that future DEX versions will be focused on providing better pricing, lower slippage, custom fee tiers, liquidity position availability, and automatically managing user positions. We can see an example of these trends in the latest updates of Uniswap v4, which introduces more customizable liquidity pools via Hooks.

Other key highlights from the exchanges market sector

KyberSwap has relaunched its Elastic contracts after identifying and fixing a vulnerability.

  • On April 17th, 2023, KyberSwap identified a smart contract vulnerability. The relevant liquidity pool contracts were paused, resulting in a sharp decline in KyberSwap's trading volume and TVL. New KyberSwap Elastic contracts were deployed and the protocol relaunched operations in late May. Although trading volumes and TVL have yet to return to the pre-pause values, a 200% increase in 30d trading volumes indicates that KyberSwap Elastic is regaining traction.

Concentrated liquidity solutions are adopted faster thanks to the expiry of the Uniswap v3 license.

  • Uniswap v3 was launched under a Business Source License 1.1 (BUSL 1.1). The license limited the use of the v3 source code in a commercial or production setting until April 1st, 2023. Upon expiry, the license was converted to a general public license, meaning the code would be forked by the public as long as it was kept open source. Since expiration, both PancakeSwap and SushiSwap have deployed their concentrated liquidity solutions using Uniswap v3’s existing code.
  • KyberSwap, Trader Joe, QuickSwap, Zyberswap, and Thena had developed alternative concentrated liquidity solutions prior to the licensing update. In addition, Biswap will be launching its concentrated liquidity solution in the coming weeks.

Velodrome launched v2.

  • The new version brings updates to user experience, enables custom pool fees, single token liquidity positions, and upgraded governance voting mechanisms.


Recent updates and improvements to the exchanges (DEX) market sector on Token Terminal.

ActionBusiness Impact
List BiswapNew listing of a second large exchange on BNB Chain by trading volume. This has increased Token Terminal’s coverage of the Exchanges (DEX) market sector.
List Houdini SwapNew listing of a non-custodial DEX aggregator which enables private transactions. This adds the first privacy solution to Token Terminal’s Exchanges (DEX) market sector.
Update KyberSwap Elastic contractsPrior to the update, Token Terminal was missing the relaunched KyberSwap Elastic contracts and understating the project’s metrics. The update allows Token Terminal to provide more accurate and up-to-date data for KyberSwap. In addition, this update enabled daily active users, treasury, treasury net, token incentives, code commits, and active developers.
Add SushiSwap circulating supply and edit market cap dataNew metric: This update adds SUSHI circulating supply and updates market caps to use onchain data.
Add DFX Finance circulating supply and edit market cap dataNew metric: This update adds DFX circulating supply and updates market caps to use onchain data.
Add Bancor circulating supply and edit market cap dataNew metric: This update adds BNT circulating supply and updates market caps to use onchain data.
Add Velodrome circulating supply and edit market cap dataNew metric: This update adds VELO circulating supply and updates market caps to use onchain data.
Add ApeSwap circulating supply, Net deposits, and edit market cap dataNew metric: This update adds BANANA circulating supply and Net deposits. In addition, this updates market caps to use onchain data.

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The authors of this content, or members, affiliates, or stakeholders of Token Terminal may be participating or are invested in protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Token Terminal does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only, and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Token Terminal at any time without notice. Token Terminal accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.

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