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Concentration of DeFi’s liquidity: Evidence from Decentralised Exchanges (DEXs) and Automated Market Makers (AMMs)

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  • Iota Kaousar Nassr
  • Eleftheria Kostika
  • Anastasia Melachrinos

Abstract

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.

Suggested Citation

  • Iota Kaousar Nassr & Eleftheria Kostika & Anastasia Melachrinos, 2024. "Concentration of DeFi’s liquidity: Evidence from Decentralised Exchanges (DEXs) and Automated Market Makers (AMMs)," OECD Working Papers on Finance, Insurance and Private Pensions 49, OECD Publishing.
    • Handle: RePEc:oec:dafaad:49-en
    DOI: 10.1787/4ed08440-en
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