In this week's Fremen Bi-Weekly, let's look into the DEX space, and let’s look at some facts.
Thanks to DefiLlama - the GOAT DeFi analytics, we can take a look at the top DEXs based on the volume facilitated over the last 7 days. This screenshot was taken on the 24th of April. Ona 24hr basis you will see these DEXs constantly change in rankings- Uniswap, Pancakeswap, and Curve, are always the top 3 though.
Uniswap is currently taking 42% of the total volume. If you then look at the rest, you may be shocked - PancakeSwap as well as Curve facilitates almost 6% each. While the remaining DEXs chip away at the rest of the 50% of volume, however these are split between roughly 50 other DEXs.
If you look at the top 10 DEXs a few of them you’ve heard of, but the ones that are hot on CT, where are they? Velodrome, Camelot, Balancer? They really arent facilitating much of the volume, although they do have a huge amount of TVL.
Capital inefficient? Balancer has a TVL of 1.3B but in the last 24hrs facilitated a volume of 21.4m, Camelot has a TVL of 100m and has facilitated 1.1m, Velodrome has a TVL of 280m and 9.8m in volume. TVL is no longer the key metric that we should be focusing on in the DEX world.
Now let's look into the fees that are generated to the LPers of these DEXs. The field now looks slightly different, Uniswap LPs are still by far making the most in fees. PancakeSwap and TraderJoe LPs are also doing quite well.
Bear in mind that the fees here do not take into consideration the amount a protocol is spending on attracting their LPers. It's pretty remarkable that only 2 of the 10 DEXs on here are not splurging out incentives for LPs (Uniswap, and CoW Swap although they don’t have traditional LPers). Yet, the LPers of Uniswap still are the highest fee earners.
Long story short, this is an alarm bell ring to all of crypto twitter, let’s look at the facts, and not look purely at the tokenomics. In the long term volume is what truly matters in regards to success. A lot of DEXs are building interesting things, a lot are just trying to attract TVL in some form factor. We as the people deep in the crypto weeds should probably be the ones that are advocating for protocols that are getting “real world adoption”, instead of getting “real ape token adoption”.
Arrakis is a protocol that builds trustless market making infrastructure & strategies on Uniswap V3.