Vertex Protocol, a Decentralized Finance (DeFi) protocol in Arbitrum, has emerged as one of the fastest-growing DEX in the industry. While its Total Value Locked (TVL) in its ecosystem stands at just $37.2 million, the daily volume has continued surging.
According to its website, Vertex Protocol has handled over $33.9 billion in transactions in its short lifetime. On Wednesday, it handled over $917 million, making it the third-biggest DEX in the world after dYdX and Uniswap v3 on Ethereum. The other three handled $1.1 billion and $945 million, respectively.
This growth has also made Vertex Protocol a highly profitable platform. It generated over $175k in fees on Thursday, bringing its combined cumulative fees to over $7 million. In the past 30 days, Vertex has made over $3.6 million in fees, according to TokenTerminal. Vertex would make more money if it existed in other chains. Instead, it exists in Arbitrum, a network that is loved for its lower transaction costs,
The main challenge is that Vertex Protocol user growth is not growing as fast. Data in its stats page shows that it has over 18,287 total users in the ecosystem. However, the number of daily users on Wednesday stood at just 45. In December, Vertex has only added 2,667 new users. This is a signal that most of the trading is being done by a few large traders.
Vertex Protocol’s rise has not been reflected in its token price. The VRTX token has crashed by more than 38% from its highest point this month as it loses momentum. Data by CoinGecko shows that the volume for the token has been quite under pressure, averaging less than $2 million per day.
Vertex Protocol will likely continue doing well during this Bitcoin and altcoin season as demand rises. The challenge, however, will be how it deals with competition in the DEX ecosystem. Some of the top contenders it will need to deal with in Arbitrum are MUX Protocol, GMX, Uniswap, and Balancer.
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