Qiao Wang, Head of Product of the Messari analytical group, doubts the institutional interest in market making on decentralized exchanges
Too early for institutions
According to Mr. Wang, the yearly profit of market makers who work on decentralized exchanges (DEX) is estimated at $1M.
There’s probably ~1 million dollars per year of profit up for grabs for DEX market makers. Too small for institutions but not a bad deal for a small team of a couple guys who know how to code.
— Qiao Wang (@QWQiao) May 29, 2020
This sum is definitely not of much interest to institutional traders. However, there’s a segment of the crypto community that might find this opportunity to be a very lucrative one.
Mr. Wang highlighted that there’s room for progress for small teams. It takes only a couple of ‘guys who know how to code’ to grab these millions, the analyst concluded.
Messari’s Head of Product foresees a bright future for automated market making executed through trading bots. Alongside that, institutional adoption of decentralized market making won’t come soon.
Broken dreams of DEXs
In the discussion below the tweet, some traders admitted that market making on DEXs still faces many challenges, i.e. high gas fees, network congestion and tread cancellations.
API and liquidity issues are also mentioned as an obstacle for decentralized trading. This complex of demerits makes overall interest in trading on DEXs insignificant.
For example. The world-leading exchange ecosystem Binance, which also offers a decentralized trading service, Binance DEX, repeatedly reports the collapse of decentralized trading volume.
According to one of the latest Binance Global Markets reports, Binance DEX is 476 times less popular than its centralized brother.
