.Footprint_Data Analytics takes a look at a metric to assess decentralized exchanges (DEXs) — the share of trade volume over market capitalization and further analyzes 7 major DEXs. 💪
Decentralized exchanges are a core Web3 infrastructure with a proven use case. People will need a place to exchange tokens without intermediaries or centralized entities if they continue to participate in the blockchain economy.
Since the most important metric for an exchange platform's health is that people are using it, this article will take a look at a metric that can be used alongside others to assess DEXes: Share of trade volume to market capitalization ratio, or SOTV/MC. This can be used to analyze DEXs’ market performance.A DEX is a cryptocurrency trading platform that doesn't rely on third-party services for custody.
As we calculate the market cap, it’s important to remember that there are different types of DEX tokens, and that their use cases have meaningful implications for users. For example, CAKE is a general utility token with governance uses, whereas CRV is entirely governance.What Is the Share of Trade Volume Metric?
By looking at SOTV/MC, we can also explore how the market prices in different tokenomics, which has significant implications for projects and developers. For example, we can compare 2 DEXs with similar ecosystems, features and trading volumes, but different supplies and token mechanics, to see if those differences effects the market cap and amount of speculative investment into those projects.
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