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Unprecedented Boom in Decentralized Exchanges: A Reaction to Regulatory Actions

Within a mere 48-hour span, the world of decentralized exchanges (DEXs) has experienced an explosive increase in daily trading volumes, swelling by an impressive $800 million. The trading activity on these platforms has been marked by frenetic energy, with investors flocking to decentralized platforms amid the recent crypto regulatory backlash.

Top Three Decentralized Exchanges Experience Staggering 444% Increase

The median trading volumes across leading DEXs – Uniswap v3 (Ethereum), Uniswap v3 (Arbitrum), and PancakeSwap v3 (Binance Smart Chain) – have witnessed a colossal 444% spike in under two days. The trigger behind this substantial surge is the U.S. securities regulator’s latest legal wranglings with the crypto giants, Coinbase and Binance. According to CoinGecko’s aggregated data, these three DEXs, which constitute 53% of the total DEX trading volume, experienced a hefty uptick of over $792 million between June 5 and June 7.

Adding to the list of DEXs experiencing an overwhelming surge is Curve, a platform that facilitates stablecoin trading. This platform has registered a dramatic 328% spike in trading volume, with most of the activity centering around the USD-pegged stablecoins USD Coin and Tether. This unprecedented surge testifies to the volatile nature of the crypto marketplace, especially under regulatory scrutiny.

In May, amidst the buzz of the memecoin craze, DEXs’ trading volumes even momentarily eclipsed those of Coinbase, a renowned centralized exchange. This brief yet significant shift underlined the potential of DEXs to capture considerable market share under the right circumstances.

Net Outflows on Binance Reach Almost $800 Million

Amid the surge in DEX volumes, the net outflows on Binance – the discrepancy between the value of assets entering and exiting the exchange – hit an astronomical $778 million. However, it’s important to note that the current net outflows remain significantly lower than the exchange’s total reserves. Even so, the surge in trading on decentralized exchanges remains remarkable. It indicates users want to avoid centralized entities wherever possible. 

This escalating market frenzy has been sparked by the U.S. Securities and Exchange Commission’s (SEC) string of legal actions against crypto exchanges. On June 6, the SEC filed a lawsuit against Coinbase, alleging the platform was involved in offering unregistered securities and functioned as an unregistered securities broker, among other charges.

Meanwhile, a day earlier, on June 5, the SEC filed similar charges against Binance, Binance.US, and its CEO Changpeng Zhao (CZ), accusing the platform of operating illegally in the U.S. by failing to register as a securities exchange. Changpeng Zhao was particularly targeted in the lawsuit as a “controlling person.”