Concentration of DeFi’s liquidity

Evidence from Decentralised Exchanges (DEXs) and Automated Market Makers (AMMs)

Decentralised exchanges (DEXs) are on-chain platforms where traders can exchange one crypto-asset for another. DEXs play an increasingly important role in the decentralised finance (DeFi) market, particularly in the aftermath of the recent downturn in the crypto-asset market. This working paper explores the characteristics of DEXs and identifies areas of possible concentration in decentralised exchanges activity and potential associated risks. To substantiate the analysis, it uses an original on-chain dataset covering the largest DEXs. The paper reveals an increased concentration within DeFi trading in the sample observed, which could exacerbate vulnerabilities already present in DeFi markets.

Available from April 25, 2024

In series:OECD Working Papers on Finance, Insurance and Private Pensionsview more titles