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Return of the DEX: Trading Volumes Poised to Set New Record

Decentralized exchange volume is on pace to hit $55 billion in January. That’s roughly half of total volume for all of 2020.

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In brief

  • Decentralized exchange volume is surging, with January already capturing the second-highest monthly volume on record.
  • DEX volumes dipped during the fall of 2020.
  • Uniswap is still the most popular DEX, but Sushiswap is gaining ground.

Decentralized exchanges are starting 2021 off with a bang. Combined, they are on track to surpass previous all-time high volumes as traders take advantage of the rising price of Bitcoin and Ethereum.

Decentralized exchanges like Uniswap and Curve Finance have already transferred more than $27 billion in transaction volume so far in January, the second-highest total since September 2020’s $29 billion, according to crypto data provider Dune Analytics—and there are still 17 days left in January. At the current rate, decentralized exchanges are on track to process more than $55 billion in trading volume in a single month, close to half of all the volume transacted in 2020.

It looks like decentralized exchanges are all the rage again after losing the spotlight to Bitcoin’s recent all-time highs.

Decentralized exchanges use smart contracts on blockchain networks like Ethereum to let users swap between digital assets without transferring tokens to an exchange wallet or verifying their identity. Decentralized exchanges, also known as DEX, exploded in popularity over the course of 2020, processing nearly $120 billion in transactions compared to just $3 billion in 2019.

Decentralized exchanges and other DeFi trends seemed to stagnate toward the end of 2020; volume fell in both October and November, and rising Bitcoin prices captured the market’s attention. But it seems like some of the gains accrued to crypto holders are going back into the decentralized finance ecosystem, which provides financial services like loans and deposit interest without the need for a centralized bank. Loans outstanding on lending services like MakerDAO, Compound, and Aave have increased more than $175 million since the beginning of 2021.

Monthly DEX Volume. Image: Dune Analytics

“Decentralized exchange deposits and volumes have both been growing in 2021,” DeFi lending protocol Aave founder Stani Kulechov told Decrypt. “DeFi is becoming the epicenter of crypto and the trading volumes are starting to reflect that narrative.”

Uniswap remains the most popular DEX, as it has been since March 2020, responsible for more than 45% of volume in the last week. But Sushiswap, a Uniswap copycat project that has begun to innovate in its own right, has grown its market share significantly. From capturing less than 2% of aggregate DEX volume at the end of October 2020, Sushiswap is now the second-largest DEX by volume, accounting for more than 22% of trade volume in the last week.

It’s shaping up to be a wild new year for DeFi that could end up dwarfing anything we’ve seen before.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

Source: https://decrypt.co/54193/return-of-the-dex-trading-volumes-poised-to-set-new-record

Blockchain

How did Bitcoin lending become so popular?

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The rising valuation of Bitcoin witnessed the growth of several sectors involved with the digital asset. The crypto lending market has exhibited extraordinary growth as institutions-focused Genesis registered a 245% growth in their outstanding loans in 2020.

While the BTC lending market is young, its swift adoption has created a billion-dollar industry, which is one of the benchmarks of development for the current Bitcoin ecosystem.

Total Bitcoin collateral grew by 1170%

Source: Arcane Research

According to Arcane Research’s recent Banking on Bitcoin report, the total active collateral in the BTC lending market has increased to ~$25 billion from $2 billion in 12 months. It was estimated that the number of Bitcoin used for collateral at the moment is around 420,000 BTC, however, this estimation is based on a modest evaluation that only 50% of the active loans are backed by Bitcoin collateral, whereas various industry experts believe it could be close to 70-80%.

While there are various Bitcoin lending companies in the current market, the impact of the institutional lending organization such as BlockFI and Genesis have been vital.

As mentioned earlier, Genesis’ active loans outstanding improved from $649 million in Q1 2020 to a whopping $3,821 million in Q4 2020. From Q3 to Q4, the growth was roughly 80%.

BlockFi registered similar impressive numbers, with a 50x increase in retail loans BTC collateral from Q4 2018 to Q4 2020; from $10 million to $500 million.

Bitcoin lending’s popularity grows

There are multiple factors that played into the expansion of the BTC collateral market. Over the past 12 months, the asset has received significant recognition after recovering at a rapid rate following the March 2020 crash. However, some of the most common reasons include leveraging on an existing position, arbitrage plays, and covering operation costs without selling any crypto holdings.

Source: Arcane Research

Some of its innate properties have improved over the few months. Bitcoin’s market has a 24/7 availability, which can be traded all year round and it is easily updated. Other assets such as Gold are only trading during the working days of the week, which is close to 30% less than Bitcoin.

Its store-of-value credentials have also improved drastically, with 75% of Bitcoin remaining in profit throughout its history.

However, one of the major reasons involves the ease at which BTC loans can be processed. Traditional loan methods require a certain amount of credit score, a tediously long process, and a lot of paperwork.

With Bitcoin, users do not need to establish a relationship with their banks to get a loan and they can easily lend from the emerging borderless Bitcoin lending market.


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Source: https://ambcrypto.com/how-did-bitcoin-lending-become-so-popular

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Blockchain

OLB Group enables crypto payments for thousands of US merchants

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OLB Group (OLB), a New York-based e-commerce merchant service provider, is making it easier for businesses to accept cryptocurrency payments.

OLB’s more than 8,500 merchants are now able to accept Bitcoin (BTC), Ethereum (ETH), USDC and DAI at the point-of-sale through the company’s OmniSoft business management platform. Customers wishing to pay with cryptocurrency in-store or through their mobile phones can simply elect to do so with their cryptocurrency wallets. All payments are processed through SecurePay, a payment gateway that authenticates the transaction, converts the cryptocurrency to U.S. dollars and approves the final sale.

The decision to integrate cryptocurrency payments was partly driven by the growth of contactless and online orders during the Covid-19 pandemic. With the OmniSoft platform already providing merchants with several options to facilitate payments, cryptocurrencies were the next logical step. 

Ronny Yakov, OLB Group’s CEO, says the payment gateway and point-of-sale architecture are “familiar territory for merchants,” which makes integrating cryptocurrencies through such channels easy.

On the topic of cryptocurrency payments – a promising but underutilized use case for the industry – Yakov believes we are still in the very early stages of adoption.

“It’s very early in crypto-as-a-payment adoption, but we see increasing interest from merchants exploring this payment option as a means to meet their customers however and wherever they prefer,” Yakov tells Cointelegraph.

He also believes certain industries are more likely to adopt crypto payments before others:

“We anticipate that adoption will happen more quickly in higher-ticket transactions such as jewelry, B2B billing and real estate because the transaction fees for cryptocurrency processing are lower – often half of typical credit card fees.”

Cryptocurrencies like Bitcoin have struggled to become a viable medium of exchange, inviting criticism about their utility. Charlie Munger, the billionaire investor and Berkshire Hathaway vice chairman, recently criticizedBitcoin for being “too volatile to serve well as a medium of exchange.”

With development work on scaling and sidechains still in progress, it remains to be seen whether cryptoassets will ever function efficiently as payment systems. In the meantime, assets like Bitcoin and Ethereum are valued for their store-of-value and development capabilities, respectively.

Source: https://cointelegraph.com/news/olb-group-enables-crypto-payments-for-thousands-of-us-merchants

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Blockchain

Litecoin, Monero, Dash Price Analysis: 28 February

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Litecoin witnessed a downwards breakout from a parallel channel and moved to its support at $156.75. Monero was projected to move sideways as trading volumes and buying activity was suppressed. Lastly, a descending triangle emerged on Dash’s chart but a breakout largely depended on the direction of the broader market.

Litecoin [LTC]

Source: LTC/USD, TradingView

On the hourly timeframe, Litecoin broke below its parallel channel and moved to another region of support at $157.5. The On Balance Volume dipped as the price broke below the bottom trendline, but the index was recovering at the time of writing. A bullish crossover in the Stochastic RSI added some more optimism as LTC picked up from the $157 support line.

However, it was hard to overlook LTC’s bear market and stronger cues could be needed to back a move above the immediate overhead resistance. A spike in the 24-hour trading volumes could be one such signal that could project an upwards breakout on the charts.

Monero [XMR]

Source: XMR/USD, TradingView

The 24-hour trading volumes on Monero were muted as the cryptocurrency failed to break out from the $224.5 and $196.3 range. The  Bollinger Bands showed that volatility remained on the lower side as the bands were compressed. This also meant that massive movements were unlikely and XMR could continue to trade within its current channel over the next few sessions.

A bullish twin peak setup on the Awesome Oscillator was negated as momentum tilted in the favor of the sellers at the time of writing.

Dash [DASH]

Source: DASH/USD, TradingView

Dash formed a descending triangle on its 4-hour chart as the price formed lower highs since snapping a local high at over $330. The On Balance Volume also steadily declined as the sell-off was heightened by a correction in the broader market. The Stochastic RSI continued its southbound trajectory after reversing from the overbought region.

Further weakness in market leaders BTC and ETH could continue to have a negative impact on Dash, and support levels at $166.8 and $135.3 could be tested in the event of a downwards breakout. On the flip side, Dash’s pattern could be invalidated if the price moves north on the back of a broader market rally.


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Source: https://ambcrypto.com/litecoin-monero-dash-price-analysis-28-february

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