Top 5 AMM Liquidity Pools of 2020 By Volume
Which AMM liquidity pools attracted the most volume in 2020?
In keeping with our theme, 2020 has been an exciting year for DEX’s, AMM’s, and liquidity pools. Over the year, reserves and trading volume have grown all across the crypto space. Starting with Uniswap exploding early in the year and then DeFi summer where Sushiswap made a push to become a strong contender in the DEX space. Uniswap pools dominate this year’s list, but some of the Sushiswap data shows they are in a close second place.
Top 5 AMM Liquidity Pools of 2020 By Total Yearly Volume
1. Uniswap WETH/USDT — 7.1 Billion
Sushiswap — $867 Million
Current Reserves — Sushiswap (147M), Uniswap (124M)
Tether is always a controversial subject in the crypto world, but no one can deny that traders love using it. It may not pass the same regulatory scrutiny as the US-based stablecoin projects, but it seems to have established some level of trust with traders worldwide.
Surprisingly, ETH does not conform to the ERC-20 standard that has become widely used in the Ethereum ecosystem. That is because Ethereum was built before the ERC-20 standard was created. WETH solves the problem of allowing simple transactions between ETH and Alt-coins using the ERC-20 standard. This allows access to decentralized platforms like Uniswap, Sushiswap, and Radar Relay. Because decentralized platforms running on Ethereum use smart contracts to facilitate trades directly between users, every user needs to have the same standardized format for every token they trade.
Tether converts cash into digital currency to anchor or tether the value to the price of national currencies like the US dollar, the Euro, and the offshore Chinese yuan. Every Tether is backed by reserves, which include traditional currency and cash equivalents. From time to time, every Tether may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every Tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.
2. Uniswap USDC/WETH — $6.6 Billion
Sushiswap — $990 Million
Current Reserves — Uniswap (163M), Sushiswap (153M)
USDC has had an amazing year of growth, becoming the stablecoin of choice for many US traders who like the frictionless aspect of using USDC with Coinbase and other services. 2021 may not be so bright for USDC, as the Trump administration looks to be establishing some new regulations dealing with stablecoins and non-custodial wallets at the end of the year. Keep a close eye on the STABLE Act for updates on this situation.
USDC is issued by regulated financial institutions and backed by fully reserved assets, and redeemable on a 1:1 basis for US dollars. USDC is governed by Centre, a membership-based consortium that sets technical, policy, and financial standards for stablecoins. As an open standard and public smart contract, USDC has rapidly grown the world’s largest stablecoin industry ecosystem. Hundreds of companies, products, and services support the USDC standard, including digital wallets, exchanges, DeFi protocols, savings, lending, and payment services. USDC is creating value for the entire blockchain ecosystem.
3. Uniswap DAI/WETH — $4 Billion
Sushiswap — $690 Million
Current Reserves — Uniswap (136M), SushiSwap (122M)
DAI remains popular in the DEX world as decentralized stablelcoins make a good pair with decentralized exchanges for people who value decentralization highly. DAI continued to grow with their shift to Multi-collateral DAI, increasing their capacity to hold different types of collateral and grow the system.
About DAI and Maker
Maker is a smart contract lending platform that enables users to take out loans by locking-in collateral in exchange for Dai. The Maker Foundation was founded in 2015 as an open-source project to offer economic freedom and opportunities to the world. In 2017, it launched the Maker governance token (MKR) and its first stablecoin iteration, known as the Single Collateral Dai (SAI), which used Ether (ETH) as collateral.
In 2019, the Foundation released the Multi-Collateral Dai (DAI), phasing out SAI. The platform has enjoyed widespread adoption and is the largest decentralized lending platform with around $2.58 billion in total value locked (TVL) as of December 2020. Dai’s soft peg to the US Dollar helps mitigate price volatility. In the cryptocurrency space, where price swings are common and dramatic, this feature helps preserve Dai’s value and promotes its use as a medium of exchange.
4. Uniswap WBTC/WETH — $2.1 Billion
Sushiswap — $398 Million
Current Reserves — Sushiswap (357M), Uniswap (152M)
WBTC making the list shows that Bitcoin has established a convincing use case in 2020 DeFi as collateral. Many Bitcoin holders have recently wrapped their Bitcoin onto the Ethereum blockchain for this purpose. While it may not generate the most attractive returns, many investors use liquidity pools to make the assets they are holding more productive.
WBTC allows the Ethereum network to be leveraged to enable new applications and use cases for Bitcoin. WBTC standardizes Bitcoin to the ERC20 format, so DApps such as Compound, Dharma, dYdX, bZx, Gnosis, Maker, Set protocol, and more can leverage Bitcoin for decentralized lending, margin trading, and derivative markets. By bringing Bitcoin’s liquidity to Ethereum, WBTC also makes it possible for traders to use Bitcoin value for token trades on decentralized exchanges (DEXs) such as AirSwap, Uniswap, ETHfinex, IDEX, KyberSwap, Loopring, Radar Relay, RenEx, Switcheo Network, The Ocean, and Dolomite.
5. Uniswap UNI/WETH — $1.9 Billion
Uniswap one-upped the US government this year by airdropping 400 UNI tokens to every user of the service, beating the $1200 COVID stimulus check for most users. That distribution contributed to the large trading volumes for the UNI token this year. Uniswap governance has also been a controversial subject this year, and it will be interesting to see what happens with the token in the next 6–12 months.
Having proven product-market fit for highly decentralized financial infrastructure with a platform that has thrived independently, Uniswap is now exceptionally well-positioned for community-led growth, development, and self-sustainability. The introduction of UNI (ERC-20) serves this purpose, enabling shared community ownership and a vibrant, diverse, and dedicated governance system, which will actively guide the protocol towards the future. In doing so, UNI officially enshrines Uniswap as a publicly-owned and self-sustainable infrastructure while continuing to protect its indestructible and autonomous qualities carefully.
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