Bank for International Settlements report: Mature participants dominate the DEX sector, providing 65-85% of liquidity

Odaily Planet Daily News: According to a report by the Bank for International Settlements (BIS) on DEX, mature participants dominate the field, equivalent to professional intermediaries in TradFi. Although retail investors account for 93% of DEX liquidity providers (LPs), a few larger participants provide 65-85% of the liquidity on DEX. The latter also dominates profits, resulting in a daily average net return rate 3 basis points higher, which is equivalent to an annual increase of 11.65% compared to retail LPs. The average position of retail investors is $29000, while the average position of professionals is $3.7 million. The report also points out that retail investors earn fees of about 10-25% and generally have lower technical levels. This study focuses on Uniswap V3 and believes that its launch has accelerated the transition of traders to mature participants. At the time of launch, mature LPs accounted for 40-50% of transactions, rising to 70-80% by the end of 2023. Mature LPs exhibit different patterns. They are targeting large pools with daily trading volumes exceeding $10 million and have complete control over these pools. Retail LPs provide liquidity for pools with daily trading volumes below $100000. Mature LPs also target trading pairs with lower volatility, which have lower risks.