Perp DEX has witnessed a strong boom in TVL recently and is expected to boom in 2023.

What is PerpDEX?

As we all know, in the financial system, perpetual contracts are also called perpetual contracts. It is a form of transaction that represents an agreement to buy/sell an asset at an unspecified time in the future. It also allows users to trade with margin or leverage (using borrowed funds).

This means that users can trade the nominal value of an asset (such as BTC or ETH) while only owning a fraction of the asset. For example, users can trade a buy order of 500 BTC with minimal initial capital. Users who are short of funds can borrow from the platform with appropriate leverage. In this form, users can conduct two-way transactions: buy (long) and sell (short) perpetual contracts.

However, most of the time we have encountered and used these solutions on centralized platforms such as CEX exchanges. Sharing the same idea, there is now a decentralized platform for perpetual markets called Decentralized Perpetual Exchange or Perp DEX.

Why will Perp DEX explode in 2023?

Perp DEX has become a hot topic this year, especially after a series of scandals at CEX exchanges, most notably the collapse of FTX in November 2022. As confidence in CEX exchanges wanes, withdrawals hit a record high as investors sought safety for their assets. Shortly after the FTX crash, the exchange saw record outflows, with more than 72,900 BTC lost and approximately 1.1 million ETH withdrawn.

More than that, the perpetual contract market is huge. The average daily trading volume of CEX exchanges in 2022 will be US$100 billion-200 billion. At the same time, Perp DEXs, despite their growth, still represent only a small fraction compared to CEX exchanges. Fortunately, the collapse of FTX, coupled with regulatory pressure, is tipping the balance in favor of DEXs.

The Perp DEX War on Today’s Market

According to data recorded by BeInCrypto from CryptoRank, the total TVL of major Prep DEXs is currently around $1.9 billion, with a total treasury value of over $800 million. These solutions have a market capitalization of approximately $2.23 billion and a total transaction volume of nearly $7 billion (based on the last 30 days). Although considerable, it still pales in comparison to the trading volume of the CEX exchange. According to data from CoinGecko, the latest 24-hour trading volume, although down by more than 52%, still reached more than $37 billion.

It seems that the market potential is still huge, and this is still a "blue ocean" for development projects. dYdX stands for GMX or Gains Network in the Ethereum and Arbitrum ecosystems are two famous names lately. According to CryptoRank, GMX’s TVL is approximately $1.17 billion, while Gains Network has reached $236 million.

The emergence of several other emerging names, such as Vela Exchange (VELA) or Perp Protocol (PERP), is expected to become heavyweights in the near future. At the time BeInCrypto wrote this article, Vela Exchange’s current TVL is around 37 million, while Perp Protocol’s TVL is 20 million.

in conclusion

Small caps will provide explosive opportunities for these Perp DEX tokens in the future. If you know how to take advantage of opportunities, you can make huge profits from this type of investment.

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