Q2 2020 DeFi Industry Research Report Part 1: DEXs

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COVID-19 and DeFi Overview

The first half of 2020 has been shattered by the global COVID-19 pandemic which turns into a significant economic shock that creates a ripple effect on a global level. Decentralized finance is an exciting aspect of the cryptocurrency industry where it continues its innovation and growth at a significant pace despite the global economic downturn.

The decentralized finance ecosystem saw accelerated growth in the second half of 2019 where we have covered the growth in our 2019 DeFi annual industry report, with leading projects such as MakerDao, Uniswap and Compound Finance taking out solid positions in the DeFi ecosystem.

The most depressing moment in the first half of 2020 was the date that global financial market turmoil also spread to the cryptocurrency industry, the Black Thursday on March 12, 2020, at that time the industry saw a market-wide panic and dried up market liquidity which resulting market-wide liquidation and opened the door for system-wide structural risks to be surfaced in the cryptocurrency market, particularly in the DeFi ecosystem.

When many people in the industry wishfully think the industry would shine in a big-time during a global economic crisis just like the one we are experiencing right now. The Black Thursday market crash, unfortunately, proved to many people that the cryptocurrency financial market is interconnected with the traditional realm, creating a cascading effect, and impacting every single aspect of the cryptocurrency market.

We are still growing fast in this early ecosystem, and a robust, structured decentralized financial system is needed to deliver the next-generation financial system to the world. The Black Thursday event was an early stress test to the DeFi financial system, and the industry held it together and successfully passed the early stress test.

Global zero-bound interest rate is potentially re-directing the money flow from the traditional market to the DeFi ecosystem where the interest rate is significantly higher than the one in the traditional system, although attracts higher risks compared to the traditional regime.

The purpose of the Q2 2020 DeFi industry report is to shed some lights on this lightning fast-moving DeFi ecosystem, and as an organisation to Find, Create and Spread value in the blockchain space. The Q2 2020 DeFi industry report has been broken into multiple parts including trading (DEXs, Derivatives and Prediction Market), Issuance (Stablecoins, Lending, Non-Fungible Token), Asset Management, DeFi Infrastructure and Others, Investment and Ratings where we work with Fundamental Lab to deliver this part.

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Q2 2020 DeFi Industry Research Report Part 1: DEXs was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.