Decentralized Exchange Volumes Exceeds the $1 Trillion Mark 0 178

This year, the trading volume of decentralized exchanges (dex) has become extremely prominent and some of the applications have been experiencing volumes that are at par with some of the centralized crypto exchanges. In the last week, decentralized platforms based on Ethereum have processed transactions worth $21 billion and 71% of all Ethereum-based dex apps were captured by Uniswap. According to recently updated metrics and the statistics published by The Block Research, the total trading volume of dex platforms throughout the year has been in excess of $1 trillion. This is an indication that there has been a significant amount of growth in the world of decentralized finance (defi) in 2021. 

With the year coming to an end, there is more than $250 billion worth total value locked in decentralized finance protocols. According to metrics, amongst all the defi applications that exist today, it is Uniswap that’s leading the pack because it commands the highest trading volume in 24-hours, which is around $1.45 billion today. Data also indicates that the total value locked (TVL) on the Uniswap platform is around $8.81 billion, which is just lower than that of Curve Finance, valued at $22.36 billion. As far as 24 dex leaders are concerned, Pancakeswap comes after Uniswap with a 24-hour trading volume of $848 million.

Then comes Trader Joe’s 24-hour trading volume at $453.7 million, Curve at $453.1 million, Sushiswap at $401 million, Uniswap v2 at $380 million and lastly Spookyswap at $185 million. The Block Research had published its 150-page report just recently, which covers the ‘2022 Digital Asset Outlook’. This research highlights the trading volumes of both centralized as well as decentralized exchanges. 

For instance, Larry Cermak,’s vice president of research, said on December 16th that the legitimate volume index of the Block, which is the spot volume, will be in excess of $14.5 trillion in 2021. This is around 8 times larger than the volume seen in the previous year. According to a report by Yogita Khatri and statistics from the study indicate that the trade volume in the year has already surpassed the $1 trillion threshold. The 2022 Digital Asset Outlook report highlighted that the monthly dex trading volumes had been the highest at a value of $162.8 billion back in May. As far as month-over-month growth is concerned, the most significant was seen in January of about 137.3%. 

However, the report noted that the volume had not made a full recovery after the crash in May and the spot volume ratio of dex-to-centralized exchange remained under 10% during the year. Along with the volumes of decentralized exchanges, the report also focused on the use of dex aggregators. The study disclosed that dex aggregators, such as 1inch, are only contributing 13.9% of the total trading volume. The researchers said that 1inch had been leading the dex aggregators with a market share of 64.9%, followed by a 16.8% share of 0x API (Matcha). A number of other subjects were also explored in the study, including derivatives market, market performances, mining revenue, a summary of venture funding in the year, stablecoins and on-chain volumes. 

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IMF Says Russia and Iran May Use Crypto Mining for Monetizing Energy 0 41

The April 2022Global Financial Stability Report of the IMF has highlighted the consequences of the ongoing Russian invasion of Ukraine. The document said that the role of the US dollar was bound to be affected because of the conflict, as it would lead to the introduction of central bank digital currencies (CBDCs) and the global financial system’s resiliency would also be put to a test. The climate transition goals could also be put at risk because of the priorities associated with energy security. Another issue that would have to be dealt with in the coming years by lawmakers is the ‘cryptoization’ which is likely to occur because emerging markets are experiencing a widespread use of crypto.

IMF cited an increase in crypto trading volumes seen after the introduction of sanctions on Russia to back their statement. This included the financial penalties that had been imposed by Western nations on Russia because of its military invasion. The report said that such cross-border transactions were increasing in the long-term, which means that there would be challenges when it comes to imposing sanctions and managing capital flow. The IMF noted that crypto transactions have increased in both Russia and Ukraine because of the capital restrictions that have been imposed.

However, it is important to note that there has been a fall in liquidity in centralized exchanges where the hryvnia and ruble trading pairs are concerned. Therefore, using crypto exchanges for making large transfers has become rather impractical due to reduced liquidity. But, the IMF admitted that users do have the option of evading some measures via the crypto ecosystem because the identity verification requirements are quite lax in this industry. Hence, the international organization said that blocking new deposits of ruble and freezing crypto assets meant that users could have shifted to non-complying or less transparent crypto platforms and service providers.

Experts at IMF believe that both Russia and Iran could circumvent their respective sanctions via crypto mining. The nations could use their energy resources for generating revenue via crypto mining outside of the traditional financial system. Currently, the countries have a limited share of crypto mining activities, but there is a possibility that it could be increased, considering the size of the mining industry. The IMF quoted estimates showing that almost 11% of the mining revenues of bitcoin could have gone to Russia, which was around $1.4 billion per month, while Iran’s share had been 3%.

Bank of England Says Crypto Assets have Financial Stability Risks 0 81

On Thursday, the Financial Policy Committee of the Bank of England disclosed that they are working on developing a regulatory framework for digital assets. The central bank also made a reference to the sanctions that have been imposed because of the war between Russia and Ukraine in the statements. Bureaucrats and financial regulatory authorities all over the world have become increasingly concerned in recent times that Russia could take advantage of crypto assets to bypass the economic sanctions that have been imposed. The press statement of the BOE said that it was unlikely for crypto assets to provide Russia with a feasible way to get around sanctions at a large scale for now, but there was a possibility they could do so.

Therefore, it is a must to ensure that there are effective public policy frameworksthat can accompany innovation in crypto assets for maintaining the integrity and trust in the financial system. The crypto economy has been highly criticized by some members of the Bank of England for quite a while. Last year in mid-November, Andrew Bailey, the Governor of the Bank of England, had expressed his concerns about the adoption of bitcoin as legal tender in El Salvador. Sir Jon Cunliffe, the deputy governor for financial stability for the central bank, said in the following month that prices of crypto assets could drop to zero.

On Thursday, the report of the FPC talked about financial stability. The committee of the central bank noted that the FPC is assessing the risks to the financial system’s stability and it has concluded that these are currently limited. This is because their size remains limited for now and they are not that connected with the wider financial system. However, the FPC said that if they continue to grow at the same pace, and if they become interconnected with the overall financial system, then these crypto assets could pose a risk to the stability of the financial system.

Since the conflict between Russia and Ukraine began, politicians and lawmakers all over the globe have been discussing, developing, or even proposing laws aimed at regulating and researching digital currencies. The FPC’s statements on Thursday show that the BOE wants to classify crypto assets in the same category as it does traditional financial assets. Not only does the FPC plan on developing a regulatory framework that would govern digital assets, it has also mentioned stablecoins.

The FPC said that a major stablecoin that does not have a reliable deposit guarantee could turn out to be a risk to the UK’s financial system. According to the committee, if they introduce a systemic stablecoin, which is backed through a deposit mad with a commercial bank, it would result in significant risks to the stability of the financial system. All of this talk about crypto has been brought forward because of the Russian-Ukraine conflict and the possibility of the former using cryptocurrencies to evade the tough economic sanctions that have been imposed by Western nations due to its actions.

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