2024 was a wild year on chain the onset of mcoin mania caused an explosion in decentralized exchange activity sending blockchain tvl through the roof yes gone are the days of reminiscing about the defi summer of 2020 trading onchain is redh hot once again and the decentralized exchanges that make it all possible are building at a Breakneck pace so the question is where do we go from here well a new report from one of the biggest crypto exch exchanges reveals the trends set to Define decentralized exchanges in 2025 my name is guy and stay tuned for our top three takeaways from this report and how they could change crypto this year today’s report is titled the state of dex’s 2025 and it was written by okx one of the leading centralized exchanges on the market today it’s an impressive piece of work and it goes into far more detail than we can cover in one video but if studying Trends in liquidity pool mechanics sounds like a nice bit of bedtime reading for you you can find the full report linked to in the description now from this report we’ve picked out three major themes to watch in the decentralized exchange ecosystem in 2025 namely is salana actually going to be the death of ethereum the rise and Rise of decentralized derivatives and how AI is changing Defi and by the way if you don’t yet have an account at okx you can get up to $20,000 in bonuses and a 40% discount on trading fees exclusively when you sign up through the coin Bureau deals page also linked to down below so without further Ado ethereum and salana the two layer one smart contract Titans not long after sana’s launch in 2020 people started calling it The ethereum Killer for its ability to do more or less everything ethereum does but much faster and for much cheaper but while salana was a welcome Evolution ethereum was the revolution that started it all in 2015 ethereum gave a smart contracts and Defi and fared most of the altcoin market as we know it this first mover Advantage along with five years of uncontested dominance in the late 2010s gave ethereum a moat so thick that the whole ethereum killer shtick was always just a bit of a cute joke however the crypto landscape underwent some profound changes in 2024 and it may be time to rethink just how unsalable ethereum’s lead really is if the price performances of eth and soul can be interpreted as the Market’s vote of confidence in either ecosystem then there are certainly grounds for asking this question salana has siphoned a lot of M share from ethereum while ethereum trundles down a convoluted roadmap and eth Maxis debate whether layer twos are a poison or an antidote sana’s low Fe Fe speed and Retail friendly ecosystem provided the perfect conditions for the explosion inex activity that we saw last year in 2024 salana based dexes captured 48% of total Dex trading volume a remarkable feat considering the hundreds of other blockchains with defi ecosystems vying for M share and liquidity no prizes for guessing what all this new activity was all about either salana has become the casino that never sleeps and in mecoin speculation it found a very strong product Market fit according to okx is report mcoin trading accounts for around 60% of trading volume on salana most of this volume is associated with the no code mcoin Launchpad pump. fun which is single-handedly responsible for more Dex trading volume than any blockchain except salana itself it’s no coincidence that memecoins found their spiritual home on salana mcoin speculation is characterized by high frequency low value retail trades and this is an area in which ethereum just can’t compete at the time of making this video salana is processing about 1,200 transactions per second around 100 times more than ethereum meanwhile the average transaction fee on salana is around 0.00001 ethereum’s transaction fees recently hit an historic low of sub one gay or about 6 cents but when the chain is busy a typical transaction fee is more like several dollars if you’re lucky had the mcoin Mania of 2024 taken place on ethereum network congestion could easily have driven gas fees back up to $100 or more any onchain meme season would have been dead in the water now of course ethereum has solved this scalability problem with its layer twos their high throughputs and low fees especially post ethereum’s denune upgrade make transactions Snappy and painless however this solution has come at the expense of fragmentation of the ethereum ecosystem not to mention liquidity each layer two has its own ecosystem and community and their memes are typically self-referential for example most notable meme coins on base are self-consciously base memes compare this to salana where memes and meme narratives of all kinds Thrive without making appeal to the fact that they are based on salana sana’s unified ecosystem and userfriendly infrastructure have made it the definitive retail chain oneclick swaps in the Phantom wallet and simple Dex user interfaces have done wonders for onboarding new users who might otherwise have felt out of their depth trying to trade crypto on decentralized exchanges however sana’s transformation into the pump. fun casino has ironically brought about its own challenges with fragmentation although sana’s liquidity is concentrated on a monolithic blockchain much of this liquidity is contained in liquidity pools smaller than $1 million since pump. fund launched in January 2024 more than 103,000 tokens have met the market cap threshold needed to graduate from the platform and migrate to sana’s Leading Dex radium upon migration the token is seeded with a small liquidity pool which is burned to ensure the token is always tradable now at the time of making this video each new pool created is seeded with $177,000 worth of liquidity although this figure has changed over time based on some back of the napkin maths salana has probably well over a billion dollars in liquidity permanently atomized across junk assets with extremely short lifespans now illiquid markets are prone to high slippage so if you want to buy a large amount of a crypto with say a five figure liquidity pool you’re quite likely to leave a big green Candle on the chart and pay a higher price than you had originally anticipated likewise you could easily nuke the chart by selling your position now this matters because liquidity begets more liquidity we know for a fact that there are trafi in institutions buying and selling meme coins but they are certainly not pump. fund tokens nor indeed whiff popcat and the rest of the gang instead it’s mostly Doge shib and pepe why is that is it because Wall Street has a more conservative taste in memes do they have something against mudang no it’s because Doge ship and pepe are the most liquid you can buy and sell relatively large positions in an orderly and efficient fashion and there are few tokens on salana for which the same can be said and this brings me back to ethereum which is despite dismal Market sentiment enjoying a lot of institutional adoption this is no doubt helped by its deep liquidity a major part of the ethereum mode to bring the point home okx is report cites an analysis of the biggest 20 liquidity pools in all of defi it found that 10 are on ethereum and a further seven are on its layer twos just one of the 20 biggest pools belong to salana which is kind of damning salana could be the hottest chain in the world but it’s highly El liquid and this precludes whale activity to a significant extent the top liquidity pools of salana are also highly volatile and can move up or down hundreds of places in a single day as Deens in the trenches flip from one Trend to another by contrast if ethereum’s top liquidity pools don’t exhibit this kind of volatility most are well established have a long trading history and with billions of dollars in liquidity are not especially volatile this explains why ethereum still dominates among Wales although as the report puts it salana dexes are quote drinking ethereum’s milkshake in many respects ethereum still accounts for around 64% of all Dex transactions worth $50,000 or more between this deep liquidity ethereum’s credible claim to decentralization its security and the maturity of its ecosystem the chain is ripe for adoption by and integration with trafi so is ethereum being killed by salana well if you’re starting at the eth soul chart then it sure looks like it but if we put our portfolios aside for a moment it’s increasingly clear that the two chains despite coexisting as smart contract layer ones are serving different purposes for different segments of the market salana May well be home to a highly liquid battl tested defi ecosystem one day but at the moment the liquidity is with ethereum and it looks pretty sticky likewise ethereum’s layer 2s and base in particular will likely be able to capitalize on the next wave of mcoin mania whenever that is but we wouldn’t count on any of them playing the role of a casino Ino better than salana now our next theme from okx report is decentralized derivatives a rapidly growing but still somewhat underdeveloped corner of defi per dexes like GMX dydx and most recently hyper liquid have pushed the boundaries of what can be accomplished with derivatives on chain but trading volumes suggests there is still a lot of room for growth if you didn’t know most crypto trading volume in general is generated by derivatives this is mostly because of the leverage factor involved centralized crypto exchanges allow you to open Futures positions anywhere from two to 100 times greater than your account size this is why for example btc’s derivatives to spot trading volume ratio hovered around 10 to1 in 2024 this is the norm in crypto however on chain it’s a different story spot trading volumes are around 10 times greater than derivatives volumes and this can be attributed to limitations in infrastructure and liquidity the experience of buying and selling spot on a centralized exchange can be simplified and stripped down onchain to something as simple and easy as a oneclick token swap in the Phantom wallet the same can’t be said for derivatives trading which tends to be more complex sensitive and demands fast and responsive exchange infrastructure margin requirements leverage liquidations funding rates and various order types all make derivatives trading more demanding on the exchange as a result derivatives are one of the rare cases when a blockchain absolutely needs to have a high throughput ethereum doing 12 TPS is not going to cut it and this leads me to our first Trend in decentralized derivatives in 2025 app chains the demands of per dexes have outgrown existing blockchains ility to serve them and their Jumping Ship this trend began with dydx the OG perex that used to dominate ethereum’s Dex market after launching on mainnet the team nearly went broke subsidizing users eth gas fees to the tune of tens of thousands of dollars a day this wasn’t sustainable so dydx migrated to the starkware layer 2 in 20121 the throughput gains were a big Improvement enabling The Exchange to expand from three markets to 30 and 5x trading volume from around $6 million to $30 million per day now of course by today’s standards this volume is peanuts and dydx needed to think bigger so in late 2023 dydx launched and migrated to its own Sovereign chain built with the cosmos SDK and capable of processing 2,000 transactions per second this helped dydx process volumes of $1 billion per day and interestingly it completed the exchanges decentralization as during the starware era the matching engine and order book were operated offchain now this is not great for ethereum whose layer tws were only born so that the network can scale enough to accommodate applications that people want to use like dydx that said maybe we should consider pex’s a special case because they have such a particular Need for Speed and throughput more recently hyper liquid has siphoned billions of dollars in liquidity out of the ethereum ecosystem by using an arbitrum based Bridge as the primary on-ramp for the exchange which was launched as a sovereign layer one app chain running with a very small set of validators hyper liquid has sacrificed decentralization in favor of performance and the performance is remarkable though the chain can process 20,000 transactions per second which is comparable with binance and this is not just on paper as hyper liquid has processed up to $19 billion in 24-hour trading volume without the exchange so much as flinching this kind of performance was previously Unthinkable for a decentralized exchange so hyper liquid has definitely earned its place in Dex history now of course this doesn’t bode well for ethereum for the reasons mentioned a moment ago and by the same token if killer applications like hyper liquid can’t find a single worthy home among the countless blockchains boasting high throughput and low latency nowadays well it’s not a good look for any other high performance layer one either anyway purpose-built app chains are helping perp Dees close in on a sexlike derivatives trading experience but you know they wouldn’t go to all that trouble just to clone a sex on chain hyper liquid for example has a number of innovative and unique fixtures youon find on any sex the most interesting of which is hyur which enables the creation of Perpetual contracts for virtually any asset or index the first index of this kind was an index of the top 20 accounts on the social 5 platform friend Tech which Once Upon a Time appeared to have quite a promising future and a number of crypto influencers using it this index was rebalanced by weekly so if you saw an influencer you didn’t like creep into the top 20 you could Max short friend USD just for fun of course I kid but this was pretty groundbreaking as a derivative product so don’t be surprised if you see more creative and unique markets popping up on hyper liquid this year now our last Trend to watch is the meeting of AI and defi so defi I guess okx is report points out that this is a very broad category spanning everything from bensur decentralized open source and permission machine Learning Network to Goat an obscene mean coin which belongs in the annals of AI crypto history despite having no AI related features per se the AI crypto landscape underwent a dramatic transformation in the second half of 20124 as AI agents arrived on Chain by the thousand and started interacting with decentralized exchanges in the process AI cryptos transformed from speculative Novelties to critical def infrastructure leading the charge was virtuals protocol which allows for the creation and Community ownership of Revenue generating AI agents on chain to date more than 11,500 AI agent tokens have been launched via virtuals platform human blockchain users Now find themselves living among AI agents trading and providing liquidity on dexes sharing market analysis and posts and even scanning social media for Trends to turn into to meme coins meanwhile more sophisticated agents use a hybrid model whereby offchain AI models make decisions and onchain smart contracts handle settlements this opens up new possibilities for agentic AI trading onchain for example using realtime liquidity data to execute subsecond Arbitrage trades across different dexes these are all technically interesting accomplishments but they are admittedly quite niche perhaps this year we’ll see agents designed specifically for casual users who want exposure to Dex markets but are intimidated or otherwise put off by the Steep learning curve of the onchain trenches of course letting these things run a mock throughout the cryptoverse is not without its risks okx raises the prospect of Agents suffering from some kind of exploit or Worse going rogue this has not happened yet but AI agents are still in a very early phase of their development and as they say there’s a first time for everything the report imagines one plausible scenario in which an AI agent with permissions to Arbitrage trade across different liquidity pools on different chains is affected by a bridge hack bridges are notoriously attractive targets for hackers and many millions of dollars have been lost through such incidents a bridge hack could turn the tokens on the bridge chains into worthless IUS and it’s possible that the agent would proceed to buy and try to Arbitrage trade with them anyway now this may be somewhat of an edge case but it’s a plausible circumstance where the lack of human decision-making could exacerbate a security incident and as AI agents proliferate across every corner of defi well we’re almost guaranteed to see them becoming parties to hacks exploits and other kinds of unexpected events it’s also worth pointing out that if an agent did for some reason make a mistake start hallucinating get exploited or go Rogue then having it exist on an immutable blockchain where every action is permanent and irreversible is potentially a bit of a nightmare let’s expect the worst and hope for the best now 2025 is not even 2 months old and it has already been incredibly eventful for crypto our Collective mind share might be somewhat stuck in Washington DC but there’s no shortage of exciting developments unfolding on chain where the real party is at ethereum is increasingly the chain of Wales and institutions while Trend hopping Traders and retailers looking for a quick dopamine hit flock to salana decentralized derivatives infrastructure is closing the ux Gap with centralized exchanges fast while the proliferation of app chains raises hard questions for existing scalable infrastructure meanwhile agents are the new protagonist of cryp to’s AI narrative creating new possibilities for automated complex defi strategies and onchain Analysis at the rate they’re popping up on chain it’s only a matter of time until crypto sees its first agent related security incident well hopefully it won’t be an army of Agents assembling to rug us all and if you think the Dex landscape will be shaped by any other major Trends this year be sure to let us all know about it in the comments if you got something out of this video be sure to smash the like And subscribe buttons and why not ping the notification bell too so you can catch our next upload before anyone else thank you all for watching and I will see you in the next one [Music]
