ecosystem building platform has recently released a report on the
market scenario and performance of these on-chain derivatives.
Published
earlier today, the
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
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
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
The
DeFiLabs report indicates
that among decentralized derivatives perpetual swap protocols
continues to lead, with volumes worth
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
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