LONDON -- Huobi DeFiLabs, one of the leading DeFi research, investment and

ecosystem building platform has recently released a report on the

market scenario and performance of these on-chain derivatives.

Published

earlier today, the Huobi

DeFiLabs report compares

spot and derivatives trading volumes on both centralized and

decentralized platforms to identify the prevailing trends when it

comes to crypto trading and make market cap projections. The

platforms considered for this exercise are Huobi Global - a

centralized crypto spot and derivatives trading platform, Uniswap for

decentralized spot trading and dYdX decentralized derivatives

platform.

It

was found that during a 6-month period from Aug 6, 2020 to Feb 1,

2021, the daily trading volumes on DEXs, represented by Uniswap

registered a 3.6x increase as against 1.6x increase in spot trading

volumes on CEXs, as represented by Huobi Global Spot Markets. The

study also found that derivatives trading is more popular on

centralized exchanges than their decentralized counterparts, not to

mention the absence of any direct correlation between spot and

derivatives volumes on DEXs.

Comparison

of Huobi Spot, Huobi Derivatives, Uniswap, and dYdX Trading Volumes

According

to available data, spot trading on Huobi was about 19% of its

derivatives trading volumes, whereas spot trading on Uniswap was 331%

more than decentralized derivatives trading on dYdX. The distribution

of volumes between spot and derivatives on CEXs is almost consistent

across top 5 platforms, with derivatives trading 4.82 times the spot

volumes. On the day DEXs reach parity with CEXs, average derivatives

trading volume on dYdX based on Uniswap's performance in the past

30 days is projected to hit $4.7 billion.

The

Huobi

DeFiLabs report indicates

that among decentralized derivatives perpetual swap protocols

continues to lead, with volumes worth $67.7 million. Based on the

earlier projection, perpetual swap offerings have the potential to

grow 50 times the current size. At present, there are 5 decentralized

perpetual contract trading protocols - dYdX, DerivaDEX, Perpetual

Protocol, FutureSwap and AlphaX, all with their own strengths and

shortcomings. However, they all face one common issue which is

shortage of adequate liquidity. Only FutureSwap using vAMMs and AMMs

with low slippage liquidity mining seems to do a bit better than the

rest. The shortage of liquidity on the rest is attributed to a higher

percentage of market-place orders from short-term traders, resulting

in increased deviation from latest prices.

Trading

statistics of major decentralized perpetual swap protocols

Considering

the average daily trading volumes and transaction counts, the Huobi

DeFiLabs report concludes that Perpetual Swap is best suited for

retail investors whereas dYdX and FutureSwap are favorable to

professional traders and large investors with on-chain hedging needs.

In

conclusion, Huobi DeFiLabs reports that decentralized perpetual swap

protocols are gradually gaining ground as popular DeFi trading

products. But only if significant changes happen in terms of

user-friendliness, liquidity provisions and network efficiency of

these platforms. These changes can be brought about by

Adopting

a combination of Layer 2 (sidechain, roll-up) and off-chain order

book or AMM

Implementation

of aggressive liquidity mining programs

Reliable

oracles and more accurate index price calculation

Professional,

user-friendly interface with technical indicators and analytical

tools.

As

DeFi catches on, these proposed improvements are expected to happen

in due course, maybe much sooner than everyone expects. Once in

place, it could slowly shift the usage trend from centralized

platforms to decentralized ones.

Read

Huobi DeFiLabs' full

report here

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(C) 2021 M2 COMMUNICATIONS, source M2 PressWIRE