Crypto users favoring DEX in the wake of CEX failures, triggering drastic reactions
Recent CEX updates have triggered several reactions in the crypto space; Uniswap trading volume spikes, ETH falls into deflation as MEV Robotics activities, and USDC trading peaks.
CEX falling integrity incites drastic crypto reactions
Due to the loss of trust in Centralized exchanges (CEX), crypto traders are now turning to decentralized exchanges (DEX). A Dune analysis released earlier today has revealed a massive increase in the trading volume of Uniswap, a decentralized exchange and liquidity pool built on the Ethereum blockchain.
According to Dune, a crypto intelligence platform, Uniswap’s V3 and V2 services have burned more than 2300 ETH in the last 7 days. This rapid rate has led to a drastic fall in the price of ETH, as the token has now gone into deflation. Another effect of Uniswap’s increased trading volume is the recent hike in the rate of MEV robotics activities. Also, the number of addresses trading USDC in DEXs has hit a new high.
The hike in MEV robotics trading
Speaking on the increased MEV activity, Dune stated that almost half of all the trading activity on Uniswap V2 comes from MEV bots and robotics trading.
“The vast majority of MEV bot activity, around 75%, comes from arbitrage bots. Sandwich bots have an average transaction size of around $50k, which is slightly higher than than arbitrage bots.”
Dune wrote.
These analyses have shown that organic traders have a much lower average transaction size than the MEV bots. Organic traders recorded an average of around $25k. Comparing the activities of arbitrage bots, sandwich bots, and organic users, Dune revealed very few unique sandwich bots per day compared to arbitrage bots. While there are about 20 activities for sandwich bots per day, there are 325 for arbitrage and almost 7000 unique organic users each day.
Uniswap and why it’s a preferred option
Unlike centralized exchanges CEX, decentralized exchanges (DEX) leave room for no central server to hack and gain access to users’ funds. Whatever funds users provide to a liquidity pool are locked by a smart contract and cannot be removed by any account other. Hence a hack would be near possible as it would require the hacker to get each individual’s account information to pull anything from the pools.
While a centralized exchange CEX runs on its own equipment, unlike decentralized exchanges, they are always managed via an external party. Although centralized exchanges’ high liquidity and quick transaction interchange attract their users, it is also prone to several failures. With DEX, users have control of their assets.
Uniswap is one of the biggest decentralized exchanges and is the preferred option considering the failure of centralized exchanges such as FTX to secure its users’ funds.
