Title page
Contents
1. Executive summary 7
2. Decentralised Exchanges (DEXs) rising in importance in DeFi 9
Decentralised Exchanges (DEXs) and Automated Market Makers (AMMs) 9
The rising importance of DEXs and AMMs in crypto-asset trading 10
DEX activity and liquidity provision: dataset used 11
3. DEX Characteristics and concentration of DeFi trading 12
Dominance of the Ethereum blockchain as the DeFi infrastructure 12
DEX market activity concentrated in a handful of protocols 13
High concentration of trading volume in a tiny fraction of liquidity pools of DEXs 14
Low trade count in liquidity pools where trading is concentrated 15
Concentration of liquidity provision in liquidity pools 16
High concentration of liquidity provision in one's hands 19
Liquidity Providers strategies and liquidity provision behaviour 20
Concentration levels in liquidity pools, measured in amount of mints and burns by liquidity providers per pool in examined DEXs and mint/burn ratio 21
Areas of possible further analysis 22
References 23
Table 3.1. Distribution of DeFi activity based on underlying blockchain 12
Table 3.2. Volume and trade count relationship 15
Table 3.3. Volume and Trade Count Distribution over Uniswap V2, V3 and Curve Liquidity Pools (LPs with a volume greater than USD 100M) 16
Figure 2.1. Increasing part of crypto-asset trading occurring in DEXs 10
Figure 2.2. Example of relative volume traded in DEX relative to CEX 11
Figure 3.1. Few players dominating the market 13
Figure 3.2. Uniswap V2 pools register a large number of liquidity providers 17
Figure 3.3. Most DEXs Liquidity Pools encounter a large number of liquidity providers 17
Figure 3.4. The largest Uniswap V2 liquidity pools by volume, trade count, and trade size, draw the most liquidity providers 18
Figure 3.5. Trading volume, count and size are positively related to liquidity 18
Figure 3.6. Uniswap V2 liquidity pool tokens are mostly held by a single liquidity provider 19
Figure 3.7. On average, 98-100% of a pool's liquidity is held by one liquidity provider 20
Figure 3.8. Number and share of Uniswap V2 Liquidity Providers which provide liquidity to one or more pools 20
Figure 3.9. Number of Uniswap V2, Curve and Uniswap V3 Liquidity Providers providing liquidity to one or more pools 21
Figure 3.10. Number of Uniswap V2, Curve, and Uniswap V3 Liquidity Providers providing liquidity to one or more pools 22
Boxes
Box 3.1. Uniswap v2 vs. Uniswap v3 14