Hopes the bottleneck on the Ethereum blockchain might now ease have sent tokens associated with decentralized exchanges – known as DEX tokens – soaring, with the token of the 0x exchange (ZRX) rallying to a two-year high on Friday.

  • CoinDesk data shows ZRX surged 40% from $0.61 to $0.97 – the highest level since October 2018 – in early morning trading.
coindesk-zrx-chart-2020-08-21
ZRX price action over past seven days
Source: CoinDesk
  • The rise comes just days after stablecoin provider Tether made plans to launch its USDT token on layer-2 scaling solution OMG Network and take some of the load off Ethereum.
  • As most decentralized exchanges run on Ethereum, this is good news for the exchanges and their tokens.
  • For example, analysts hope Tether's move will bring down average transaction fees, which recently reached a record high of $6 last week.
  • Ethereum-based DEXs like 0x and also Kyber Network (KNC) are vulnerable to network congestion on Ethereum as high fees reduce trading activity.
  • “Any reduction in ETH transaction costs due to tether’s migration on the OMG network is a huge win for DEX trading,” Denis Vinokourov, head of research for crypto prime broker Bequant, told CoinDesk in a Telegram chat. 
  • While KNC is only up by 3% it has also surged 900% year to date. Other prominent DEX coins such as Aave's LEND have gained 3,000%, while ZRX has increased by 300% YTD.
  • ZRX may, therefore, be catching up with its peers as it still has plenty of ground to cover, Vinokourov said.
  • Glassnode data shows that as of Thursday, the mean fee per Ethereum transaction was $3.17 – significantly higher than the $0.55 seen in July.

See also: DEX Aggregator 1inch Raises $2.8M From Binance Labs, Galaxy Digital and More

2020-08-21-14-20-48
Ethereum transaction fees spiked to a new ATH last week
Source: Glassnode
  • It remains to be seen whether Ethereum fees will fall back to July levels – this uncertainty may help explain why the ZRX price has pulled back to $0.75 just as CoinDesk was going to press.

See also: DEX Aggregator 1inch Raises $2.8M From Binance Labs, Galaxy Digital and More

Disclosure
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.