Uniswap liquidity rose 208% in Q1 as top CEXs saw declines

• Uniswap V3 recorded a 208% jump in liquidity in Q1.
• Coinbase and Binance saw declines of – 6.35% and -13.4% respectively amid regulatory pressures.
• The depeg of USDC and collapse of Silicon Valley Bank also highlighted the pressure events in the quarter.

Uniswap, the largest decentralised exchange (DEX) platform, recorded a significant boost in liquidity during the first three months of 2023, compared to major centralised exchange (CEX) platforms Binance and Coinbase.

Other insights from a new market report include Bitcoin dominance rising to above 45%, Ethereum continuing its dominance in the DeFi space and Tether (USDT) accounting for over 60% of stablecoin transactions in the quarter.

Get the inside scoop on 2023 Q2 with our Outlook Report on macro trends, inflation & digital assets.

✔️ $BTC‘s market dominance rises to 45.2%, highest since April 2021

✔️ $ETH dominates DeFi, TVL rises 52% to $76.8bn, market share increases to 72%

✔️ Centralised exchange…

— CCData (@CCData_io) April 14, 2023

CCData: impact of regulatory pressures on liquidity

The market outlook report by CCData highlights how market liquidity suffered from regulatory pressure in Q1, with the impact being on reduced liquidity for the world’s largest CEX platforms.

The first quarter was littered with various enforcement actions, lawsuits and settlements involving crypto exchanges. Coinbase reached a $100 million settlement with the NYDFS in February before receiving a Wells Notice from the SEC in March, while Binance was sued by the CFTC in March.

Other landmark regulatory pressure events in the quarter involved Gemini, Kraken, KuCoin and CoinEx, and further market uncertainty as the stablecoin USDC briefly depegged sucking liquidity from centralised exchanges.

Unswap V3 saw a 208% jump in liquidity as CEX platforms registered declines

Comparing ETH liquidity on Uniswap to that of Binance and Coinbase during the quarter for instance, shows Uniswap V3’s liquidity increased substantially. CCData, in their 2023 Quarter 2 Outlook Report, found that Uniswap V3 recorded an impressive 208% surge in liquidity.

Meanwhile, Coinbase and Binance registered declines of – 6.35% and -13.4% respectively. According to CCData, the boost in liquidity for the DEX platform can be attributed to prevailing market conditions that saw participants try to capitalise on USDC’s depeg by pushing liquidity into pools like the ETH-USDC.

On-chain data shows a noteworthy drop in the 1% market depth for the top trading pairs BTC-USD and BTC-USDT. Liquidity declined to its lowest level for USD and USDT on 26 March as the impact of the collapse of Silvergate Bank, Signature Bank and Silicon Valley Bank (SVB) hit the crypto industry.

CCData researchers also note that low liquidity and trading volumes had a noticeable impact on centralised exchange reserves. Uncertainty saw exchange reserves fall to the lowest level since 2020, before seeing a slight improvement in March, according to the report.