Having high liquidity is crucial in every trading market, especially in crypto. It enables traders to have a higher chance of matching orders and they can easily enter or exit the market. If a market lacks liquidity, traders may not be able to buy/sell their crypto at their preferred price.
Trading volume is one of the indications of market liquidity.
Amid the recent market volatility, we did some simple research on the trading volume of perpetual contracts. We always believed that perpetual contracts would still print volume regardless of market sentiments. Here’s what we found out:
In general, Centralized exchanges (CEX) such as Binance have significantly higher trading volumes compared to decentralized order book exchanges (DEX) such as DyDx, which can be between a few dozen times to more than a thousand times. Therefore, some traders might prefer CEX over DEX for trading.
However, as decentralized finance (DeFi) continues to grow since 2021, including the development of different blockchain ecosystems and various Ethereum layer 2 solutions, improving the efficiency of DEXes, the trading volume gap between CEXes and DEXes has become narrower. As a result, the number of traders and trading volume have increased on DEXes.
By comparison, Binance had a record high of $150 billion in daily trading volume while the highest 24h trading volume of DyDx was $17 billion. These trading volumes were recorded when the market was still relatively bullish.
However, have you ever thought about the trading volumes for CEXes and DEXes in a bearish environment when people expect lesser trading activities?
Here is a table comparing the trading volume of Binance and DyDx, two of the top crypto exchanges in CEX and DEX respectively, in bull market and bear market.
From the above table, we can conclude that during both the bull market (Bitcoin price above ~$60K) and relatively bear market (BTC price between ~$20–30K), the daily trading volume of Binance remains around 30x of DyDx’s daily trading volume. The DEXes’ trading volume is not significantly affected by the market trend but instead has shown convergence with CEXes’ trading volume.
Here we believe that trading perpetual contracts in DEXes is the way to go. Sat.is is committed in helping traders achieve — deep multi-chain liquidity, seamless and intuitive experience while trading in a decentralized manner having self-custody of their funds. And with that, our community will get to experience our beta testnet very soon!
Feel free to contact us at: firstname.lastname@example.org