Enhancing capital efficiency necessary for wider DEX adoption, states PancakeSwap’s product lead.

PancakeSwap, a decentralized finance (DeFi) platform, believes that greater capital efficiency is needed to boost the market share of decentralized exchanges (DEXs). According to Chef Momo, the pseudonymous product manager of PancakeSwap, the introduction of concentrated liquidity automated market maker (CLAMM) options trading on Arbitrum has the potential to enhance capital efficiency in DeFi. CLAMM options operate on supply and demand mechanics, offering more advanced options trading features and opportunities for liquidity providers. Chef Momo states that liquidity providers can utilize their existing liquidity in v3 pools on PancakeSwap to write options and earn premiums, thereby increasing their overall returns. Currently, PancakeSwap holds the 10th-largest market share among DEXs, with a 3.37% share on PancakeSwap V2 and a 2.92% share on PancakeSwap v3, according to CoinMarketCap data. Chef Momo emphasizes that initiatives like CLAMM that focus on capital efficiency and composability in DeFi will play a crucial role in expanding the market share of DEXs. This is important as DEXs currently lag behind centralized exchanges (CEXs) in terms of trading volume and user activity. For instance, Binance, the largest CEX, records a daily trading volume of $26.4 billion, while Uniswap, the largest DEX, only achieves $1.44 billion in 24-hour trading volume. The number of unique active wallets on Uniswap is also significantly lower compared to Binance. To overcome these challenges, initiatives that enhance capital efficiency in DeFi, such as CLAMM, can contribute to the growth and competitiveness of DEXs in the market.