There is no shortage of new trading markets launching across the multiple decentralized exchanges. As is often the case with DEXes, however, many of these markets will see no activity after a week or less. It is a trend affecting both Ethereum and Binance Smart Chain alike.
DEXes Have Too Many Dead Markets
In an environment where no one controls much of anything, some degree of chaos will be present. Decentralized exchanges are no exception in this regard, as anything can happen to the trading pairs. In fact, supporting all of the currencies, tokens, and assets is often a recipe for dealing with nearly dead markets on arrival.
While Uniswap may get a lot of negative attention for rug pulls and other shenanigans, it is not alone. Statistics shared on Twitter confirm all Ethereum-based AMM DEXes have 301 dead markets since February 1st, 2021. This indicates many new trading pairs may not be around for a week or two. A big problem for investors and speculators, as it is impossible to predict what will happen to specific assets.
Diving deeper into the statistics, it is evident that Uniswap suffers the majority of dead markets. It also has the highest trading volume of all Ethereum DEXes today. The other seven dead markets affect Sushiswap, a platform gaining plenty of traction lately. The remaining DEXes see no dead markets but also far fewer active ones.
What this means for the future of BambooDeFi, DXSwap, and other LinKSwaps remains unclear. With so few active trading pairs on these DEXes today, it seems unlikely anything significant will happen. It is a challenging space to compete in with these behemoths like Uniswap and Sushiswap. Additionally, the rising Ethereum fees will not help much either.
Binance Smart Chain Has A Similar Issue
Comparing the Ethereum DEXes to those running on Binance Smart Chain, a similar trend becomes apparent. While BSC has many more decentralized AMM exchanges today, It too suffers from a high number of illiquid trading pairs. Interestingly enough, these pairs are spread out among a lot more platforms, which is somewhat unusual.
Overall, PancakeSwap has a high percentage of markets that dry up very quickly. Between February 1st and today, 238 of these can be labeled as “presumably dead”. This is based on 444 new markets created, resulting in a very high failure rate. Similarly, BakerySwap, BSCSwap, iCream, JulSwap, and PokeballSwap have very high failure rates. Not the best outlook for anyone looking to experiment with DEXes on Binance Smart Chain.
The decentralized nature of this trading type creates many opportunities but also additional problems. When markets dry up for any reason, many traders may not return to the platform. For now, there is no lack of new traders looking to take advantage of markets on DEXes. Eventually, the inflow of fresh capital may dry up unless developers can avoid these dead markets.