China’s cryptocurrency ban benefits DEX and DeFi protocols

Bitcoin and Altcoin prices plummeted last week as China put strong pressure on cryptocurrency trading. Despite this, the extremely resilient crypto market has managed to rebound.

While China’s disruption of cryptocurrency transactions is aimed at slowing down the use of this asset class and the growing decentralized finance (DeFi) ecosystem, token prices and protocol efficiency from projects like Uniswap have seen a increase. UNI and dYdX prices have been on the rise since the China moves began.

According to data from Chainalysis, there has been a significant amount of regional Bitcoin (BTC) flow in East Asia, as highlighted by the long orange bar in the chart below. This suggests that cryptocurrency holders in the region are relocating their holdings in response to regulatory pressure.

Regional BTC flows. Source: Chainalysis

As Chainalysis noted, “when assets flow within a given region, it signifies a change between local exchanges, but when a flow is observed between regions, it is often interpreted as regulatory concerns, geopolitical changes, or significant changes in market prices.” .

The lack of flow from East Asia, coupled with crypto exchanges like Huobi and Binance suspending services for Chinese investors, reveals that the funds are held within the region but traded on decentralized exchanges.

There are gains in the DeFi ecosystem

This increased movement in the East Asia region has boosted activity at entities such as Uniswap and the decentralized derivatives exchange dYdX.

Uniswap trading volume vs. total revenue. Source: Token Terminal

DydX, where it is currently the most widely used decentralized derivatives exchange, has seen a surge in demand after regulators around the world placed restrictions on centralized exchanges with lax KYC policies offering derivatives services.

According to data from Token Terminal, dYdX; Token pricing was in the top 5 in many categories last week, including total protocol revenue, fees paid, price / sales ratio, and price / earnings ratio. The stock market also rose to the top 6 on increases in total fixed value (TVL).

Total revenue and total value locked in dYdX. Source: Token Terminal

A closer look at the available data reveals that second-layer protocols and top-tier Ethereum (ETH) competitors, managed by Avalanche-based protocols such as Trader Joe and Pangolin, also made the biggest breakthroughs in the last week. . The Phantom network was also included in this trend.

According to the data, the decentralized financial ecosystem is considered the preferred terrain for cryptocurrency holders to conduct transactions beyond the control of governments and financial regulators.

Opinions and comments expressed here are solely those of the author. It may not reflect the views of Cointelegraph. All investment and trading involves risk. You should do your own research when making a decision.

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