Analyst: 2021 a Perfect Time For Ethereum, Decentralized Exchanges to Boom

Analyst: 2021 a Perfect Time For Ethereum, Decentralized Exchanges to Boom


The third quarter of 2020 has seen the strong resurgence of decentralized finance (DeFi) on Ethereum. With it, the demand for decentralized exchanges (DEXes) surged, causing Uniswap to briefly overtake Coinbase Pro at one point.

Heading into 2021, Ethereum and decentralized exchanges would likely perform even better, quant trader Qiao Wang said.

Two Reasons an Ethereum and Decentralized Exchange Take Off in 2021 is Likely

From July to September, DeFi and decentralized exchanges saw a massive spike in demand.

The frenzy around yield farming, which mostly revolves around staking various cryptocurrencies including Ethereum to earn governance tokens, caused DEX volume to spike.

Since centralized exchanges undertake a rigorous verification process to list tokens, newly-emerging DeFi tokens typically do not get on exchanges in time.

Consequently, traders and DeFi users flock to decentralized exchanges, like Uniswap, to trade DeFi tokens.

When the yield farming craze was at its peak in September, the high user activity on decentralized exchanges clogged Ethereum.

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