Perp DEXs Capitalize on Market Turmoil: Liquidation Chaos Fuels Record Fee & Volume Surge

Decentralized exchanges are feasting while traditional traders bleed out.

Liquidation Avalanche Creates Fee Bonanza

As leveraged positions crumble across crypto markets, perpetual decentralized exchanges are raking in unprecedented revenue. The very volatility that destroys overextended traders is proving to be a goldmine for DeFi protocols.

Volume Explosion Defies Bearish Sentiment

Trading activity on major perp DEX platforms has surged past previous all-time highs, with daily volumes doubling last month's figures. Meanwhile, fee generation has tripled—proving once again that in crypto, the house always wins even when players lose their shirts.

The beautiful irony? While Wall Street hedge funds complain about market conditions, these decentralized platforms are quietly building war chests that could fund the next bull run. Just don't tell the SEC.

Perp DEXs open interest attempts a recovery

Perpetual DEXs were the most affected, losing over 50% of their open interest on liquidations. Open interest on all perp DEXs was at $25.75B before the crash, later dipping to lows of $13.71B. 

Within days, open interest recoveded to over $17B in total, where Hyperliquid still held over $8.24B in open interest, based on DeFiLlama data. Hyperliquid itself reported a delayed drop to $6.24B, down from $15B during regular trading times. Perpetual DEXs still carry over $33B in daily volumes, with record activity for the past week. Over $264B were traded during the week of October 6-12, matching the weekly record for DEXs activity.

The perp DEXs liquidations came in the middle of a highly competitive narrative, where old and new perp DEXs attracted peak activity. The crash and on-chain liquidations were especially harmful, as more retail traders attempted to hold Leveraged positions, getting exposed to outsized risk. 

Top perpetual DEX tokens also took a hit, with weekly losses between 16% and 45% for the leading protocols. HYPE sank to $38.71, as the sector is still attempting a recovery of value locked, open positions, and token valuations. 

Lending protocols, DEXs benefit from higher fees

DEX trading saw its biggest weekly activity of over $177B in the week of 6-12 October. The outlier result followed a general trend of DEXs activity expansion. 

Uniswap and PancakeSwap remained the biggest activity hubs, with no signs of distress. The recent DEXs activity also coincided with a wave of meme token trading on the Binance ecosystem. 

Lending protocols had a bigger shock due to their underlying structure. Total value locked remained at over $83B, with AAVE at the lead. However, total amount borrowed fell below $50B for the first time since August, as users avoided the risk of opening loans. 

Briefly, the annualized yield of Lido’s stETH jumped to 7.05%, later returning to its usual range. Overall, DeFi lending decreased its outsized yields during previous market downturns, offering more conservative earnings for a lower risk of liquidations. 

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