Looking back at 2022, what innovations did the highly anticipated DEX bring?

Written by: Lgnas, DeFi Research

Compiled by: Leo, BlockBeats

With the collapse of CEX giants, skepticism and demands for centralized trading platforms have increased, leading most attention to shift towards DEX. The progress of DEX in 2022 has been relatively steady, unlike the rapid advancements of CEX, which have been making innovative contributions to crypto. Renowned DeFi researcher Lgnas summarizes the trends of DEX in 2022, featuring both established DEX and new industry players.

DefiLlama lists 200 DEX, but I would like to introduce the "top 20" among them. Depending on the criteria used (whether TVL or trading volume), the rankings of the top 20 can vary. The following image shows the top 20 DEX ranked by TVL.

However, when judged by 7-day trading volume, the top 20 DEX rankings differ significantly from those based on TVL, among which:

• Uniswap ranks first in DEX
• Dodo jumps to fourth place
• Seven DEX from the TVL ranking are replaced by MetaTdex, Hashflow, Serum, THORswap, ShibaSwap, Orca, and WOOfi.

Based on network traffic data, the rankings change again—PancakeSwap takes the lead. Therefore, compared to purely metric-based rankings, I am more focused on the innovation, uniqueness of DEX, and what contributions they have made to the crypto space.

DODO

Returning to the rankings, why does DODO's trading volume rank fourth? DODO boasts a TVL of $46 million and a trading volume of $568 million (over the past 7 days)—showing good capital efficiency. However, most of this trading volume comes from two stablecoin pairs (USDT-USDC, DAI-USDT).

DODO's innovation lies in the introduction of the PMM (Proactive Market Maker) algorithm, which reduces slippage by gathering more funds (near market price) to increase liquidity; DODO also introduced single token supply and liquidity pools to minimize impermanent loss.

Uniswap and KyberSwap

Capital efficiency is the focus of most innovations. The Uniswap V3 "concentrated liquidity" protocol was launched in 2021, and this year, KyberSwap also introduced a similar Kyber Elastic protocol, with differences including:

• Anti JIT/Snipe protection (not provided by Uni V3)
• LP fees reinvested into the LP pool

Click to learn more about the comparison between Uni V3 and Kyber Elastic.

Trader Joe

Trader Joe's solution is a liquidity book, which concentrates liquidity into specific price ranges, but LPs can deposit liquidity into multiple price ranges.

The end result: better prices and lower slippage, but in terms of 7-day trading volume, Trader Joe did not make it into the top 20 DEX rankings as it only operates on AVAX.

Hashflow

Hashflow achieves capital efficiency by connecting traders with professional market makers. Hashflow uses market maker quotes instead of AMM, providing a 0 slippage CEX trading experience. Additionally, it offers MEV protection and bridge-less cross-chain swaps.

BiSwap

Unexpectedly, BiSwap on BSC entered the top 20 as a competitor to PancakeSwap. BSW is a fork of Uniswap V2, and its main selling point is incentives: 50% of swap fees returned, 0.2% swap fees, mining, referrals, launchpads, gambling, staking, trading competitions…

PancakeSwap

PancakeSwap has also been active this year:

• CAKE supply reached 750 million;
• Adopted vCAKE's veTokenomics;
• Collaborated with ApolloX (https://twitter.com/ApolloX_com) to launch perpetual contracts;
• Expanded to Ethereum and Aptos.

Main goal: to burn as much CAKE as possible.

Balancer

Of course, CAKE is not the only DEX adopting the ve Token model; Balancer also uses veBAL, which includes locking 80% of BAL and 20% of ETH LP tokens to promote consistency among long-term token holders. However, this comes at a cost: whale-dominated governance will directly allocate BAL rewards to their pools. Click to learn more.

Velodrome

Velodrome takes veTokenomics to a new level. Velodrome is an improved version of Andre Cronje's failed Solidly project. By staking VELO (for up to four years), users receive veVELO: an ERC-721 governance token in NFT form, utilizing the ve(3,3) rebase mechanism.

Holders of veVELO receive "bribes" for voting on emission issues. It turns out that Velodrome's project on Optimism is quite popular because it allows for acquiring liquidity at a lower cost, making it more cost-effective than initiating its own liquidity mining activities.

SushiSwap

For Sunshi, it has been a relatively calm year. The Sushi treasury is running low, so the Sushi DAO voted to allocate 100% of SushiSwap fees to the treasury. New tokenomics will be introduced within at least a year. Nevertheless, Sushi has successfully maintained a TVL ranking of 7 and a trading volume ranking of 6.

Curve and Platypus Finance

Two DEX focusing on stablecoins are launching their own stablecoins. For Curve and Platypus Finance, liquidity is crucial. To attract users, they use their own tokens as rewards, but their stablecoins should make liquidity attraction cheaper and more "sticky."

The core of Curve's crvUSD is the lending-liquidation AMM algorithm (LLAMA), which is a type of AMM that can continuously liquidate or not, reducing bad debt risk. Click to learn more.

In addition to their stablecoins, Platypus is also committed to NFT innovation. The Platypus vePTP system requires staking PTP to earn higher stablecoin deposit yields, and Platypus Hero# NFTs can accelerate vePTP generation and retain some vePTP upon unstaking.

Osmosis

Stablecoin swaps are about to launch on Cosmos. Osmosis is a DEX for trading and mining on Cosmos. The team announced the launch of Stableswap on December 8, created by upgrading and modifying AC's Solidly curve formula.

Uniswap

Finally, let's talk about Uniswap. Uniswap V3 was launched in April 2021, featuring:

• NFT trading
• Improved interface and analytics
• Deployment on more chains
• Ability to purchase cryptocurrencies with fiat

Four months later, the license prohibiting forks of Uni V3 will expire. What will happen next?

Summary

2022 DEX Summary:

• DEX developers focused on capital efficiency, reducing slippage, impermanent loss, and fees;
• Solutions were built around concentrated liquidity or market maker models;
• Expansion to other chains and NFTs;
• Launch of stablecoins;
• Incentives govern everything.