The Paradox of Decentralized Exchanges: Many Tasks, Few Customers




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5 COMMENTS

  1. I would take DappRadar metrics with a grain of salt because a) you have to opt-in dApps to be tracked, so there’s some DEXs they’re likely missing and b) depending on the way the contracts are set up, they don’t always capture all the users. I know when they track 0x contracts usage for example hey only look at number of unique msg.senders, not the number of of actual makers and takers, so the total users highly underestimated for 0x contracts. Still a useful tool for quick analysis, you just have to know it’s limitations.

    That being said, I think all of the top DEXs in the space would freely admit that adoption is and will continue to be slow. Onboarding is challenging, scaling is still a big issue, and there are numerous other factors that mean we may not see millions of users in the ecosystem any time soon. This is true for all dApps and DEXs. But even as growth is slow it’s still very consistent. The ecosystem is huge compared to only a year ago, when really Etherdelta was still the only notable name in town. It’s also worth noting that the DEX ecosystem has continued to grow nicely even in a market downturn. If/when crypto markets start picking up again, we should start seeing this growth accelerate.

    It’s still to early to say whether or not this will be massive in the long term or if it’s all just one big geeky experiment that goes nowhere of significance, but one thing I’m confident of is that we’ll all keep plugging away at it for a long time because we genuinely believe the effort is worth it.

  2. We just published an article on the user base of decentralized exchanges:

    [https://medium.com/alethio/on-the-user-base-of-decentralized-exchanges-683c0b6d4e13](https://medium.com/alethio/on-the-user-base-of-decentralized-exchanges-683c0b6d4e13)

    It looks at how many users there are and how the dexes share the users.

    The second aspect is important because shared users are unlikely to be fake, at the moment.

    Also look at our Dex explorer r/http://dex.watch it’s much more detailed than dapp radar and shows trades, volume and user base of most DEXes.

  3. I suspect that its actually a bit worse than the numbers suggest. Most of the coins with high volumes on Idex and ED/FD are basically junk, which suggests to me that its people trying to game the numbers to offload those coins rather than actual demand. The fact that those exchanges basically have no volume on the higher quality tokens is alarming to me since it suggest that they have very few real users.

    We definitely do not need as many Dexes as we currently have, but I also don’t think we really know enough about how to build a good Dex to know which ones should succeed or not 🙂 We’ll have to let this play out, the good ones will surface eventually.

    Anyways, I see this mostly as posturing for when scalability solutions start to come online and we can get more consumer friendly systems in place. Functionality is fundamentally limited right now. I do think the bear market is a great opportunity though for investors to figure out who are the real players and who are the pretenders. Its harder to tell in a bull market since there is so much more noise.

  4. DEXs seem to spring up every day, so let’s break down what’s driving the apparent paradox between rapid growth of exchanges and stagnant growth of exchange users.

Comments are closed.