Haseeb Qureshi, managing partner at Dragonfly Capital, and Dan Robinson, research partner at Paradigm, discuss the explosion in decentralized exchange activity on automated market makers from $1 billion earlier this year to more than $10 billion in August.
- Why trading in automated market makers has 8xed in a few months
- how automated market makers work, and how specific dexes can specialize for the assets being traded on them
- why traders would prefer to trade on a dex vs. a centralized exchange
- how incentivized pools have drawn traders and liquidity
- why trading on a dex seems can be more appealing than on a centralized exchange
- why trading on dexes now mirrors trading on Binance in 2017
- how "DeFi is the hottest coolest place where people are making a lot of money"
- the difference between the metrics of liquidity, trading volume and total value locked for a dex
- why AMMs are capital inefficient
- what it means that fees paid on Uniswap are about half of those paid on Bitcoin
- what the purpose of liquidity mining is
- why Haseeb doesn't think that dexes have network effects and that once professional market makers come in the space, Uniswap will lose market share
- whether users will use DeFi directly through the dexes or through another interface
- why Dan thinks that DeFi is now comparable to financial investment in the 1970s
- whether or not yield aggregators like yEarn make it harder for AMMs to compete
- what happened with the CRV token launch
- initial dex offerings or initial DeFi offerings, like the UMA token launch
- whether, because of the high fees on Ethereum and the how long its transition to Ethereum 2.0 will take, DeFi activity could move to another blockchain such as Solana
- where DeFi will go over the next few years
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Episode links:
Haseeb Qureshi: https://twitter.com/hosseeb
Dan Robinson: https://twitter.com/danrobinson
Haseeb’s post on the rise of AMMs: https://medium.com/dragonfly-research/what-explains-the-rise-of-amms-7d008af1c399
Haseeb's post on how Uniswap could be un-bundled: https://medium.com/dragonfly-research/unbundling-uniswap-the-future-of-on-chain-market-making-1c7d6948d570
Dex volume: https://defiprime.com/dex-volume
Trading volume on centralized exchanges: https://www.theblockcrypto.com/genesis/74539/july-by-the-numbers-a-look-at-crypto-exchange-volumes-open-interest-and-miner-revenue
Incentivized pools: https://pools.fyi/#/?tag=incentivized
Top dexes by trading volume: https://www.coingecko.com/en/dex
Ethereum transaction fees: https://bitinfocharts.com/comparison/ethereum-transactionfees.html
Uniswap website visits 15x in July: https://messari.io/article/uniswap-total-website-visits-grew-15x-in-july
Website traffic to DeFi platforms explodes in July: https://www.theblockcrypto.com/post/74231/defi-platforms-web-traffic-july
Fees paid to various crypto projects: https://cryptofees.info
Curve reaches $1 billion in TVL: https://www.theblockcrypto.com/linked/75014/curve-becomes-third-defi-protocol-to-hit-1-billion-in-total-value-locked
The Block on dex aggregators: https://www.theblockcrypto.com/genesis/69468/dex-aggregators-user-experience
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