In simpler terms, PancakeSwap argues that decentralized finance, specifically decentralized exchanges, could expand their market presence more effectively by using capital more wisely.
Chef Momo, the pseudonymous product manager of the DEX, told CryptoMoon:
“Such initiatives promoting capital efficiency and composability will be pivotal in expanding the market share of DEXs.
On April 8, PancakeSwap, a well-known decentralized exchange (DEX) that operates across multiple blockchains, introduced CLAMM (Concentrated Liquidity Automated Market Maker) options trading on Arbitrum. This was achieved by combining the DEX platform with Stryke’s options trading protocol. In simpler terms, PancakeSwap and Stryke joined forces to bring advanced options trading functionality to the Arbitrum network using CLAMM.
According to Chef Momo, CLAMM options represent a fresh method for generating on-chain liquidity within the decentralized finance (DeFi) realm. This is achieved through the application of basic supply and demand principles.
“The scarcity of options liquidity persists as a significant challenge not only in DeFi but CeFi as well. DEXs serve as the fundamental liquidity infrastructure in DeFi. Leveraging this liquidity for option writing presents a substantial opportunity for bolstering on-chain options liquidity.”
The ARB/USDC, ETH/USDC, and wBTC/USDC trading pairs now have new option features available. CLAMM options provide advanced options trading functionalities for crypto investors and present new chances for liquidity providers. As stated by Chef Momo:
Liquidity Providers on PancakeSwap’s v3 pools have the opportunity to use their current liquidity to create options contracts and collect extra income through the premiums, thereby increasing their total earnings.
According to data from CoinMarketCap, PancakeSwap ranks as the tenth largest decentralized exchange with a 3.37% trading volume share on PancakeSwap V2 and a 2.92% trading volume share on PancakeSwap v3.
DeFi needs greater capital efficiency
According to Chef Momo, initiatives akin to CLAMM that enhance capital utilization and adaptability within Decentralized Finance (DeFi) are essential for expanding the user base of Decentralized Exchanges (DEXs).
“In TradFi, the options markets dominate the derivatives sector, but its presence in crypto is minimal, presenting considerable growth opportunities. Options bring significant value to DeFi including hedging investment portfolios and generating income.”
Decentralized exchanges (DEXs) trail significantly behind their centralized counterparts in terms of trading volume. For instance, the leading centralized exchange, Binance, boasts an impressive daily trading volume of approximately $26.4 billion.
Instead of “In comparison, Uniswap only has a trading volume of $1.44 billion in the last 24 hours, making it the largest decentralized exchange according to CoinMarketCap,” you could also say:
Individual traders flock to Binance at an average rate of 21 million per week, whereas Uniswap, the leading decentralized exchange, was accessed by approximately 733,930 unique active cryptocurrency wallets during the last seven days, based on DappRadar’s data.
Uniswap’s weekly volume of $25.5 billion is still short of Binance’s daily trading volume.
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2024-04-10 13:34