PancakeSwap’s May Volume Outperforms All Major DEXs in April Combined
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PancakeSwap’s May Volume Outperforms All Major DEXs in April Combined

Ethereum's gas fees appear to have sent users elsewhere - to BSC.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

In May, PancakeSwap experienced tremendous growth, going from one of the underdogs in the DEX market in April, to arguably the market leader in May. Statistics from theblockcrypto show that PancakeSwap’s trading volume in May was higher than all other major DEX trading volumes in April combined. The most logical reason for this would be that PancakeSwap runs on the Binance Smart Chain (BSC), a blockchain with much cheaper fees than Ethereum.

PancakeSwap’s Trading Volume Surges in May

The DeFi landscape has changed dramatically within the space of just one month. In April, Uniswap v2 had the highest trading volume. This comes as no surprise, as Uniswap has dominated the DEX market for most of 2021 and even 2020. As the first major exchange to use an automated market maker (AMM), Uniswap was seen as a leader in the DeFi space. 

In April, Uniswap v2 had around $51 billion in trading volume, which placed it above all competitors. In May, Uniswap v2 had $59 billion in trading volume, but that number had now been eclipsed by PancakeSwap, which had a trading volume of around $161 billion in May. Contrast this to PancakeSwap’s April trading volume, which was $22 billion. 

To put this in perspective, PancakeSwap saw a staggering 632% increase in trading volume, whereas Uniswap v2 saw only 16%. In fact, not only is PancakeSwap trading at a higher volume than Uniswap, but in May it traded a higher volume than all other major DEXs in April combined (which was around $150 billion). Using this metric, PancakeSwap is the current DEX market leader. 

Not only is this growth impressive for PancakeSwap, but it is impressive for the DeFi industry as a whole, as it shows that there is an immense amount of demand for decentralized services. It also shows that, despite May’s shaky price fluctuations and fears of an imminent bear market, the DeFi space is still increasing its numbers. This suggests that, even if we enter a crypto winter, where most coins and tokens decrease in value, DeFi may still hold strong. 

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Is Ethereum to Blame For PancakeSwap’s Boost?

There are likely multiple factors for why PancakeSwap’s volume shot upwards, but the most obvious answer is that it runs on a cheaper blockchain than most other DEXs. PancakeSwap runs on the Binance Smart Chain (BSC), whereas others such as Uniswap, SushiSwap, and 0x run on Ethereum. While Ethereum is by far the largest blockchain ecosystem at the moment, its users currently face uncomfortably high transaction (gas) fees.

Ethereum has proven itself to be unable to handle the rise in its blockchain usage, which has led to expensive, slow, and congested transactions. As a result, Ethereum-based DEXs have clearly taken a hit as small trades are no longer worth the cost. The Ethereum community is soon to be making a major upgrade to the network, making it more scalable, and there is a good chance this will solve these problems. However, until then it is still largely expensive to use for retail traders. 

Arguably, Ethereum’s current scalability issues poured cold water on Uniswap’s hotly anticipated v3 release, which had the potential to change the DeFi landscape. In May, Uniswap v3 traded at only $24 billion, a low number considering it was the debut of the most well-known DEX in the industry.

During this bull market, Ethereum has been its own worst enemy. High fees and slow transactions have led people to look around for alternatives, and the most robust competitor at the moment is the Binance Smart Chain, the blockchain that PancakeSwap runs on. 

It is fascinating that with BSC’s PancakeSwap trading at the highest DEX volume, and Binance’s standard exchange trading at the highest CeFi volume, it is clear that Binance has a stronghold over crypto. It is hard to say just how much involvement Binance has with PancakeSwap, as their dev team is anonymous, but they did reveal earlier in the year that some of the team is made up of ex-Binance members

Ethereum 2.0 might save its own blockchain, but the question is whether it will be too little, too late. The crypto industry moves fast, and if Ethereum cannot fix its problems in due time, both developers and the larger community may leave it behind and go elsewhere—for good.

Why do you think PancakeSwap’s trading volume rose so high? Let us know in the comments below.