Large Traders Dominate DEXs as High Ethereum Fees Keep Retail Investors at Bay

The average trade size on Curve Finance ranges from $500,000 to $1 million, according to Kaiko.

AccessTimeIconDec 2, 2021 at 7:58 a.m. UTC
Updated May 11, 2023 at 4:38 p.m. UTC
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Decentralized finance (DeFi) came into existence to democratize finance, much like the internet made content accessible to everyone.

However, according to French digital assets data provider Kaiko, the adoption of decentralized exchanges (DEXs) that facilitate peer-to-peer transactions without an intermediary remains restricted mainly to large traders, known as whales.

“Average trade sizes have increased on all DEXs over the past few months while the actual number of trades has stayed flat, which suggests that the profile of the average trader now skews more whale,” Kaiko said in a weekly research note published on Monday.

The average trade size on Curve Finance ranges from $500,000 to $1 million, while deals on other prominent DEXs such as Uniswap V3, Uniswap V2, SushiSwap and Balancer V1 average between $10,000 and $20,000. That’s nearly 10 times larger than the average trade size of $2,000 to $4,000 seen on centralized exchanges (CEXs).

The daily trade count on CEXs, however, tallies into the millions while major DEXs process fewer than 50,000 deals per day, with Curve and Balancer V1 averaging fewer than 1,000 traders per day.

Daily DEX trade count (Kaiko)

Kaiko analysts attributed whale dominance to the high transaction costs on Ethereum, the world’s largest blockchain for smart contracts.

“The large trades are likely due to Ethereum’s high transaction fees, which prevents more retail traders from using DEXs,” Kaiko’s weekly research note said. “Every trader on a DEX must pay Ethereum transaction fees for each trade, which frequently surpass $100 due to congestion and scalability issues.”

According to blockchain analytics firm Chainalysis, DeFi’s growing popularity in wealthier countries is the main reason for DEXs processing much larger transactions than centralized platforms.

While several smart contract platforms facilitating cheaper and faster transactions such as Avalanche, Binance Chain, Polkadot and Solana have emerged over the past 12 months, Ethereum still leads the pack.

The total value locked in Ethereum-based DeFi applications stands at $178.5 billion. That’s more than nine times greater than Binance Chain’s TVL of $19.25 billion, data provided by Defi Llama shows.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

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