Transaction volume in Ethereum decentralized exchanges bounced back even as cryptocurrency prices retreated.

Ethereum DEX had robust activity

According to DeFi Llama, the volume in Ethereum (ETH) rose by 18% to $9.88 billion as that in other chains retreated. Solana (SOL) DEX volume retreated by 8% while Base, BNB Smart Chain, Arbitrum, and Polygon fell by 4%, 14%, and 10%, respectively.

The worst-performing chain was Tron (TRX) whose volume fell by 52% to over $642 million. This decline happened as the popularity of the recently launched SunPump meme coins eased. According to CoinGecko, most of the SunPump tokens like Sundog, Tron Bull, and Muncat have retreated from their all-time highs.

Most DEX networks in Ethereum’s network had a big increase in volume. Uniswap’s volume rose by 14.2% to $5.7 billion after the company settled with the Commodity Futures Trading Commission over its margin products. It agreed to pay a $175,000 fine and stop offering these solutions in the US.

Curve Finance’s volume jumped by 68% to over $1.48 billion while Balancer’s, Hashflow, and Pendle rose by 68%, 196%, and 85%, respectively. 

Bitcoin and most altcoins tumbled

This volume happened in a difficult week for the crypto industry as most assets dived. Bitcoin dropped to $52,550, its lowest point since Aug. 5 and 26% below its all-time high. Ethereum also dropped below $2,200, down by over 44% from its highest point this year. The total market cap of all coins dropped below $2 trillion for the first time in months. 

There is a risk that the sell-off will continue as a sense of fear has spread in the market as the crypto fear and greed index has dropped to the fear zone of 34. Cryptocurrencies tend to see more weakness when investors are fearful.

DEX and CEX exchanges also experience weak volume in periods when cryptocurrencies are falling. According to DeFi Llama, the volume in Ethereum DEX platforms dropped to $49.5 billion in August from a high of $69 billion in March as most coins jumped. 

The same happened across other DEX platforms as volume fell from over $257 billion in March to $240 billion in August.

Looking ahead, cryptocurrencies may benefit from the upcoming start of interest rate cuts by the Federal Reserve. Data released on Friday showed that the unemployment rate fell slightly in August to 4.2% while the economy created 142k jobs. Risky assets tend to bounce back when the Fed is cutting rates.

Injective, the popular Cosmos-based blockchain for decentralized finance, continued retreating amid concerns about its ecosystem.

Injective (INJ) token retreated to $16.90 on Sep. 3, its lowest point since Aug. 8. It has dropped by over 67% from its highest point this year, erasing most of the gains it made in 2023. Its valuation has dropped from over $4.8 billion in March to $1.65 billion.

Ecosystem challenges remain

Injective’s price action has coincided with the sell-off of most altcoins as the crypto fear and greed index remained at the neutral point of 47. 

This decline has occurred despite a significant increase in the network’s on-chain transactions. According to its website, Injective has handled over 918 million transactions since its launch.

However, concerns persist about its ecosystem in relation to its valuation. Data from DeFi Llama shows that its DEX protocols handled $43.7 million in the last seven days, making it the 23rd largest chain in the industry, lagging behind platforms like Osmosis, Mantle, and Blast.

Injective’s DEX volume has been in steady decline after peaking at $611 million in March this year, indicating that its DEX ecosystem is not experiencing growth.

The total value locked in the Injective ecosystem has retreated to $46.5 million, making it the 51st largest chain. This TVL has also been decreasing after peaking at $72 million earlier this year. Additionally, the volume of stablecoins in its ecosystem has dropped to $22.6 million.

Injective’s performance in the DeFi industry is notable because its goal is to become the blockchain for the financial services industry.

Injective token has also retreated as its staking inflows have declined. Data shows that the network has experienced outflows in the past two days, while the staking yield has retreated to 10.4% from last month’s high of 18.7%.

Trader cautions on Injective

INJ token has pulled back after reaching a high of $52.96 in March. Recently, it has formed a series of lower highs and lower lows, indicating that bears are in control. In a note, Altcoin Sherpa, a trader with over 222,000 X followers, warned that the token remains at risk of further downside.

Injective has also remained below the 50-day moving average, while the accumulation/distribution indicator has continued to decline, pointing to increased distribution.

Its volume has also continued to fall, suggesting more downside. This sell-off will be confirmed if it drops below the descending trendline that connects the lowest swings since April 12.

The volume of cryptocurrencies traded in decentralized exchanges dropped in August.

According to DeFi Llama, DEX platforms handled cryptocurrency worth over $181 billion in August, down from $198 billion in July. 

The monthly volume of activity on DEX platforms peaked in March when they handled over $260 billion as most cryptocurrencies jumped. 

Ethereum (ETH) was the most active chain for DEX platforms in August, handling over $52.5 billion. Solana (SOL) and Arbitrum (ARB) followed, with DEX platforms processing tokens worth $42.5 billion and $22.3 billion, respectively.

Tron (TRX) was the most improved chain in the DEX platforms, helped by the recently launched SunPump meme coin generator. SUN, the biggest DEX platform in its ecosystem, handled $3.2 billion worth of coins. 

Uniswap was the most active DEX platform in August followed by Solana’s Raydium and BNB Chain’s PancakeSwap. 

Solana’s DEX volume dropped because of the performance of meme coins in the ecosystem like Bonk, Book of Meme, and Dogwifhat. Bonk has dropped by over 64% from its highest point this year while Dogwifhat and Book of Meme have slipped by more than 70% from the year-to-date high.

Binance maintained its lead among CEX exchanges

Meanwhile, Centralized Exchanges had a better performance in August. Data shows that these exchanges handled $1.2 trillion during the month, higher than the $1.1 trillion they processed in the previous month. Like DEX platforms, CEX exchanges’ volume peaked at $2.48 trillion in March as Bitcoin and other altcoins soared. 

Binance maintained its lead, handling over $448 billion followed by Bybit, Crypto.com, Huobi, and Coinbase. 

Additional data shows that the open interest of cryptocurrencies in the futures market fell during the month. Bitcoin’s futures interest stood at $30 billion on Aug. 31, down from the monthly high of $37 billion.

Cryptocurrencies had another difficult month in August. Most of them initially dropped on Aug. 5 as the fear of the unwinding of the Japanese yen carry trade pushed most assets downwards.

While most coins bounced back from their monthly lows, they remained significantly below their highest levels this year.

Bitcoin remains 18% below the year-to-date high while Ethereum has dropped by almost 40% below its March highs. 

As we wrote on Friday, some analysts cite the underperformance to the falling liquidity in the crypto market and the rising fear that some governments will start selling their coins.