DeFi Weekly Exchange Volume Hits $32 Billion Amid FTX Collapse

The shockwaves from FTX’s historic collapse are still being felt across the industry today, but some industry segments, like DeFi, are actually doing better because of it.

Trading volumes on decentralized exchanges (DEXs) hit a whopping $32 billion over the last seven days, according to data from Dune Analytics.

The lion’s share of the volume comes from Uniswap, which accounts for $20.9 billion of the trades made over the same period.

On November 8, volumes on Uniswap more-than-tripled from the day before. That was the same day Binance announced it had signed a non-binding agreement to bail out FTX for an undisclosed amount.

Just a day before, trading volume had been nearly $1.3 billion—a more or less average day at Uniswap over the last month. However, in the wake of the bailout news, volumes spiked to just over $4.2 billion.

Many exchanges posted an overnight doubling of trade that day, including Curve, which went from $700 million to $1.3 billion.

Smaller DeFi platforms also benefited. On Friday, 1Inch network, an aggregation platform for various DEXs, tweeted gains across all of its protocols over the 24-hour period immediately preceding the announcement. Dune data indicates that the network hosted over $5.3 billion in volume over the last week.

1/ ? In these terrible days, we see more people coming to #DeFi and using #1inch.

In the last 24 hours, total direct volumes on 1inch have exceeded $1.94B ?

In the last 3 days, the number of daily users of our protocols has increased by almost 20%.

? https://t.co/d9lF0sRwjn pic.twitter.com/UZilIpyOvI

— 1inch Network (@1inch) November 11, 2022

DEX activity ticks up

The rising popularity of decentralized exchanges over the last week is not surprising considering the biggest horror stories of the industry’s ongoing liquidity crunch—dubbed “crypto winter”—have all followed a similar pattern.

Lenders like Hodlnaut, Vauld, Celsius, and Singaporean exchange Zipmex all suspended customer crypto withdrawals because of “recent market conditions,” a term which is a bit of a euphemism for “not having the liquidity to meet outstanding redemption requests.”

All of them are bankrupt now.

Withdrawal freezes are ostensibly taken to “stabilize liquidity,” a phrase used in Celsius’ withdrawal freeze announcement and paraphrased by various others who have frozen customer funds.

In FTX’s case, the decision to freeze withdrawals was taken after the exchange struggled to meet demand for a staggering $6 billion worth of requests in just 72 hours.

So, how can consumers avoid the obvious risks of custodying their crypto with a centralized exchange? To DeFi fans, the answer is obvious: enter decentralized exchanges.

Because DEXs don’t interact with banks at all, customers have to have digital assets in their possession already to use one; the customer experience is a little more complicated than with centralized exchanges too.

However, what they lose in terms of user-friendliness, they can make up for in security (at least in terms of mitigating some of the damage caused by FTX). This is because DEXs are self-custody solutions.

That means you hold the private keys yourself, and unless they get compromised, your crypto is immune from freezes and outages caused by routine maintenance work.

If there’s one silver lining to the terrible liquidity crises blowing up across the industry, it’s that crypto appears to be returning to first principles and reexamining its founding ethos of decentralization.

After all, centralized interventions were the very reason crypto was created in the first place.

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