DEXes are the most successful Decentralised Applications

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Welcome to the third edition of Onchain Lense, a newsletter focused on onchain analysis of key blockchain protocols and sectors within the crypto ecosystem.

Today, we're diving into the fascinating world of Decentralised Exchanges (DEX) and their onchain activity across all major blockchain networks. These dApps, as you'll soon discover, are the powerhouses driving the popularity of Decentralised Finance (DeFi).

Decentralised exchanges are peer-to-peer marketplaces where users can buy and sell cryptocurrencies without an intermediary that typically facilitates the transaction in a centralised exchange.

DEXes came into existence as a response to the limitations and risks of centralised alternatives. As DeFi started to gain momentum, developers began creating user-friendly dApps that allowed users to trade cryptocurrencies in a peer-to-peer manner.  Since then, such applications continued to evolve and improve, with new features and technologies developed to address various challenges. Today, they offer increased security, lower fees, and greater transparency, making them an attractive option for many cryptocurrency traders and investors.

The spot volume on all DEXes combined hit $1 billion for the first time in June 2020, and within a short span of one year, it hit an all-time high of $200 billion in May 2021. This was followed by several corrections in the market, as can be seen from the chart below. More than three years later, we are yet to see the monthly volume reach close to that level. The most recent high was in March 2024 at the monthly volume of $178 billion, still lower than the November 2021 number of $180 billion at the peak of the previous bull market cycle.

The top five decentralised exchanges by monthly volume numbers are Uniswap, Orca, Raydium, PancakeSwap, and THORChain. These represent the diversity of the crypto ecosystem, as Uniswap is on Ethereum, Orca and Raydium are on Solana, PancakeSwap is on Binance Smart Chain, and THORChain is an application-specific layer 1 network that allows cross-chain token swaps.

According to the data platform DeFiLlama, DEXes are the most common type of dApps, with over 1300 listed on their platform. Altogether, it represents a Total Value Locked (TVL) of $21.2 billion, of which the top five dApps capture 56%. By TVL, the top five are Uniswap, Curve DEX, PancakeSwap, Balancer, and Raydium. Unlike in the case of ranking by monthly volume, three out of these five are on Ethereum. In the last 24 hours, all of them combined have processed an impressive volume of $7.07 billion, generated fees of $8.09 million, and revenue of $2.77 million.

Besides trading tokens, DEXes enable users to generate a yield from their assets through liquidity provisioning. So, this is an additional benefit, along with the privacy, low fees, and security offered by these decentralised applications.

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