Whales dominate DEXs as Ethereum fees keep private investors away

DeFi was born to democratize finance, just as the internet makes content easily accessible to everyone.

However, according to French digital asset data provider Kaiko, the introduction of decentralized exchanges (DEXs), which enable peer-to-peer transactions without intermediaries, remains limited mainly to large traders or whales.

“The average trade size has increased across all DEXs over the past few months, while the actual number of trades has remained unchanged, suggesting that the average trader’s profile is now more whale-focused,” Kaiko said in a note The weekly study appears on Monday (November 29th).

Average trade sizes at Curve Finance range from $ 500,000 to $ 1 million, while trades on other popular DEXs such as Uniswap V3, Uniswap V2, SushiSwap and Balancer V1 average between $ 10,000 and $ 20,000. That number is nearly ten times the average $ 2,000 to $ 4,000 trade size seen on centralized exchanges (CEX).

However, the number of daily transactions to CEX runs into the millions, while large DEXs process fewer than 50,000 transactions per day, with Curve and Balancer V1 having fewer than 1,000 transactions per day on average.

Kaiko analysts attribute the forest dominance to the high transaction costs at Ethereum, the world’s largest smart contract blockchain.

“The large transactions are likely due to Ethereum’s high transaction fees, which are preventing more retailers from using DEXs. Every trader on DEX has to pay ETH fees per transaction, which due to congestion and scalability problems often exceed $ 100. “

According to blockchain analytics firm Chainalysis, DeFi’s growing popularity in rich countries is the main reason DEXs process much larger transactions than CEXs.

While several smart contract platforms have emerged in the last 12 months that enable cheaper and faster transactions, such as Binance Chain, Solana, Polkadot, Avalanche, Ethereum is still the leader.

The Total Value Locked (TVL) in Ethereum-based DeFi applications is currently $ 178.5 billion, 9 times more than Binance Chain’s TVL of $ 19.25 billion Defi Lama.

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