September has been a tough month for the crypto industry. The DeFi protocols, on the other hand, are seeing increased activity. Market participants remained cautioned as a result of the regulatory clampdown from China and elsewhere.
Hence, many users have now that some buyers have changed their focus away from Bitcoin [BTC] and have instead resorted to decentralized finance [DeFi] tokens. As a matter of fact, DeFi protocols have seen more activity as Chinese FUD sent shockwaves across the industry. According to the latest data compiled by Messari, there are now three DeFi protocols generating over $100 million in annualized revenue – DYDX, PancakeSwap, and Yearn Finance.
DeFi’s incredible traction
In the wake of China’s crypto crackdown, many centralized exchanges scrambled to conform to new regulations. The derivatives DEX DYDX’s trading volume, on the other hand, even eclipsed Nasdaq-listed centralized crypto exchange Coinbase. Messari revealed that DYDX generated revenue of a little under $500 million annualized in the past month. To put things into perspective, DYDX has amassed well over 80% in two days as many speculated that Chinese crypto users are converging on the decentralized margin trading protocol.
Next up was PancakeSwap with a monthly revenue that stood at $219 million. PancakeSwap is a leading DEX at Binance Smart Chain. However, the latter has taken a substantial hit of late. But according to Messari’s analyst Ryan Watkins, PancakeSwap continues to be a “cash machine” for BSC. He stated,
“Despite BSC activity having fallen off a cliff since Q1 PancakeSwap remains a cash machine. Most profitable spot exchange in DeFi. Although I will note that if UNI flipped on its fee switch it would be producing far more income than PancakeSwap.”
Additionally, Yearn Finance happens to be the only protocol earning more than $100 million a year without paying out token incentives.
Overall, decentralized exchanges [DEXs] have held their position as the most profitable protocols in the decentralized finance sector by a huge margin. This is true for centralized counterparts as well, since CEXs remain the most profitable centralized crypto businesses. According to Watkins, the clampdown of centralized venues from certain jurisdictions will further catalyze the growth of DEXs.