According to a report by the Bank for International Settlements (BIS) on DEX, mature participants dominate this field, equivalent to professional intermediaries in TradFi.
Although retail investors account for 93% of DEX liquidity providers (LPs), a small number of larger participants provide 65-85% of the liquidity on DEXs. The latter also dominate profits, resulting in an average daily net return rate that is 3 basis points higher, which translates to 11.65% more annually than retail LPs. The average position for retail investors is $29,000, while professionals have an average position of $3.7 million.
The report also notes that retail investors earn fees of about 10-25%, and their overall technical level is relatively low.
The study focuses on Uniswap V3, suggesting that its launch accelerated the shift of traders towards mature participants. At launch, mature LPs accounted for 40-50% of trades, rising to 70-80% by the end of 2023. Mature LPs show different patterns. They target large pools with daily trading volumes exceeding $10 million and fully control these pools. Retail LPs provide liquidity for pools with daily trading volumes below $100,000. Mature LPs also target trading pairs with lower volatility, which carry less risk.