Cointime

Download App
iOS & Android

Matcha Q1 2024 Brief

From Messari by Micah Casella

Key Insights

  • Matcha’s trade volume grew for the second consecutive quarter, up 30% QoQ to $1.6 billion.
  • Total trades and unique traders on Matcha increased 26% and 17% QoQ, respectively.
  • Trading on Base defined Matcha’s Q1 activity, taking 38% of Matcha’s volume share and accounting for 57% of all trades in the final week of the quarter.
  • Matcha set a record-low daily average rate of failed trades (revert rate) at 5.4% compared to the market average of 8.4%. It also saw an 85% reduction in failures for trades routed through the 0x Gasless API.
  • Matcha revamped the UX of its Matcha Auto feature (which facilitates gasless transactions) and added support for Base, Optimism, and Arbitrum.

Primer

Matcha is a decentralized exchange (DEX) aggregator launched by 0x in June 2020. As a DEX aggregator, Matcha aims to deliver users the best prices on DeFi trades. Using the 0x Swap API, Matcha finds the best-executed price from over 130 onchain (i.e., AMMs) and offchain (i.e., 0x proprietary RFQ) liquidity sources. This approach enhances price efficiency and optimizes gas costs for users, rendering it a more economical choice than direct trading on platforms​​. Matcha supports the trading of over 5 million tokens on nine blockchains, including Ethereum, BNB Smart Chain (BSC), Polygon, Avalanche, Optimism, Fantom, Celo, Arbitrum, and Base.

Matcha also offers a range of core features that enhance the trading experience.  Gas fees are conveniently embedded into trades to cover re-submission costs, alleviating concerns over failed transactions and eliminating the need for users to hold native gas tokens. Matcha also provides MEV (Maximal Extractable Value) protection, powered by 0x Swap APIs, to prevent slippage and MEV attacks. Ethereum, Polygon, Arbitrum, Optimism, and Base users that utilize Matcha Auto or route trades through RFQ also avoid MEV attacks. Additionally, Matcha supports limit orders as well as cross-chain trading across seven different networks.

Website / X (Twitter) / Discord / Warpcast

Key Metrics

Performance Analysis

Volume and Trades

Total trades on Matcha increased 26% as trade volume grew for the second consecutive quarter, reaching $1.6 billion, up 30% QoQ. Usage of Matcha features, such as RFQ routing and Matcha Auto, also grew. The average daily percentage of MEV-protected trades from RFQ routing grew to 24% and volume to 19%. Additionally, Matcha continuously implements new updates that make trading simpler for users such as revamping Matcha Auto, its gasless transaction interface. The update involves Matcha covering gas costs using the token the user intends to sell. Matcha Auto also removes the barrier of requiring users to hold native assets, enabling them to trade with any asset in their wallets. Matcha’s new and existing trade features have compounded the effects of an optimistic market, contributing to its strong QoQ growth.

Q1 2024 was defined by activity on Base. Throughout the quarter, Base jumped to become the third-ranked chain for Matcha volume (4%) and trades (19%), only behind Ethereum and Arbitrum. As a result, Ethereum experienced its lowest level in volume throughout the year, dropping to 79%. Base ended the quarter with the most competitive stats of any other non-Ethereum chain yet, taking 38% of Matcha’s volume share and accounting for 57% of all trades in the final week of the quarter.

Increased Base activity appeared to be driven by a resurgence in memecoin trading and anticipation of Coinbase’s Smart Wallet. Once launched, the wallet will make interacting with Base and crypto easier for users. Additionally, Matcha’s December launch of cross-chain swaps enabled users of other chains to take advantage of bridging liquidity and trading on Base.

Movement into Other pairs (trading pairs outside the top five) may reflect the memecoin season that kicked off on Base in Q1. Additionally, Matcha rapidly lists new assets and currently supports over 5 million, leading to the trading of many new and popular pairs on its supported chains. Q1 2024 trended toward Other pairs taking a significant portion of trade volume. At the end of the quarter, the Other category accounted for 19% of the trade volume in Q1 and ended the quarter with 33% of the volume in the final week.

Simultaneously, Stable/Stable trading accounted for 23% of the Q1 trade share. It ended the quarter with a record-low 4% volume in the final week. The fall in Stable/Stable trading may indicate that traders sought more speculation-based opportunities versus low-yield arbitrage in Q1, with volume flowing into ETH/Stable and Other pairs. ETH/Stable trading ended the quarter at a yearly high of 62% in the final week of Q1. A potential catalyst for moving assets into ETH may have come from the Ethereum ETF approval speculation — with even JP Morgan anticipating that the SEC will approve Ethereum ETFs.

Unique Traders

Matcha set a record quarter serving 54,000 unique trading addresses throughout Q1, up 17% QoQ. The increase in Matcha's use by traders could be attributed not only to the bullish market sentiment but also to the platform's enhanced trading experience, thanks to new features introduced in the last two quarters. At the end of Q4, Matcha implemented multiple updates to its limit order product and added support for cross-chain trading. And in Q1, Matcha extended support for Matcha Auto gasless swaps to three new chains via the 0x Gasless API. As the market continues to appreciate, Matcha’s trading features will become increasingly important in attracting and retaining users.

Revert Rate

Matcha uses the 0x Swap API and 0x Protocol for its backend processes. The 0x Swap API aggregates liquidity across all supply sources (onchain and offchain), helping traders fill orders with the best prices. This process requires orders to be stored offchain while trade settlement occurs onchain. The 0x Protocol ensures all parts of the trade are satisfied before executing the swap; if not, the trade is reverted. The revert rate is useful for determining the reliability of the protocol.

In Q1, Matcha set a record low for revert rates throughout the year at 5.4%. Meanwhile, the market average hovered around 8.4% for the quarter. On the development side, Matcha integrated 0x’s Gasless API, where activity routed through the API led to an 85% reduction in trade failures. Using 0x’s infrastructure, Matcha has built a robust DEX aggregator that frequently outperforms the market average in reliability.

Qualitative Analysis

Warpcast Presence

Matcha has built up the largest presence on Warpcast as a DEX aggregator. In addition to posting content, Matcha has also created multiple Warpcast Frames for users to interact with. Frames are applications embedded into Warpcast’s social media posts. In expanding its presence on Warpcast, Matcha partnered with Degen, a memecoin project created to reward Farcaster users. Farcaster is the decentralized protocol underlying Warpcast.

Matcha Upgrades

Matcha implemented a series of upgrades in Q1, adding new features and improving functionality.

  • Implemented Matcha Auto gasless swaps and approvals, via 0x’s Gasless API, on ArbitrumBase, and Optimism — before, it was only available on Ethereum and Polygon.
  • Added annotations to USDC tokens in the swap interface to help users distinguish official USDC issued by Circle from bridged versions and clones.
  • Increased support to over 130 liquidity sources in Q1, adding Camelot for trading on Arbitrum and Maverick Protocol for trading on Ethereum and Base.
  • At Ethereum Denver, 0x’s Duncan Townsend presented two upcoming 0x updates that Matcha will use: a price engine upgrade and a new DEX aggregation router focused on mitigating harmful MEV called Argon.

Cross-Chain Swaps

Cross-chain swaps launched in early December 2023. Q1 2024 was the first full quarter in which users could trade assets on Matcha across seven different chains. In this quarter, Base grew its share of trades and volume heavily, other EVM-based chains grew modestly, and Ethereum lost share in both metrics. Cross-chain swaps effectively serve as a bridge, widely utilized by numerous users to transfer liquidity between chains, though typically from Ethereum to other chains. Key aspects of this product are listed below.

  • Users maintain custody while using this product.
  • Support across seven chains: Ethereum, Polygon, Arbitrum, Optimism, Base, BNB Smart Chain, and Avalanche.
  • Only five steps to conduct a cross-chain swap, all on the same interface.
  • Matcha has not announced any fees for the service.
  • Powered by Socket, an interoperability protocol that facilitates data and asset transfers across chains.

Closing Summary

Providing useful trading features and supporting activity on various blockchains has paid dividends for Matcha’s usage. In Q1, it saw trades, volume, and traders grow by 26%, 30%, and 17% QoQ, respectively. During the favorable market conditions in the past quarter, Matcha launched a series of features that improved the trading experience, such as cross-chain trading, limit order updates, Matcha Auto gasless swaps on new chains, and cosmetic updates to the interface. The protocol also added more liquidity sources and rapid support for emerging assets. Assuming Matcha maintains its current trajectory, it should continue to capture activity from emerging ecosystems like Base and should be an attractive option for onboarding new users into crypto trading.

Comments

All Comments

Recommended for you

  • Web3 Gaming Analytics

    Transforming Gaming: Helika & The Rise of Advanced Analytics

  • Qian Zhimin, the main culprit in the 60,000 Bitcoin money laundering case, was sentenced to 6 years in prison in the first instance

    On May 24th, the Southwark Crown Court in London ruled in the second trial that 42-year-old Chinese national Qian Zhimin was guilty of money laundering and will serve six years and eight months in prison. Previously, Qian Zhimin had attempted to purchase multiple luxury homes in London, including a 23.5 million pound seven-bedroom mansion in Hampstead and a 12.5 million pound mansion with a private cinema and gym, which caught the attention of the police. An investigation found over 61,000 bitcoins worth more than 3 billion pounds in a digital wallet, setting a record for the highest amount of cryptocurrency seized in the UK. Currently, 23,300 bitcoins worth over 1 billion pounds are still in circulation. It is said that these bitcoins came from a 5 billion pound investment fraud case in China between 2014 and 2017, where the funds were transferred overseas and used to purchase cryptocurrency. Qian Zhimin did not directly participate in the fraud, but played a "front desk" role in helping to disguise the source of the laundered funds.

  • Plume Network Raises $10M Seed Funding to Bring Real-World Assets on-Chain

    San Francisco-based Plume Network has secured $10m in seed funding to expand its operations and development efforts. The funding round was led by Haun Ventures, with participation from Galaxy Ventures, Superscrypt, A Capital, SV Angel, Portal Ventures, Reciprocal Ventures and others. Plume provides a modular EVM L2 blockchain for real-world assets, integrating asset tokenisation and compliance providers directly into the chain.

  • A certain address destroyed 11.51 million DOGE 16 minutes ago, worth $1.86 million

    According to on-chain data, an address transferred 11.51 million DOGE, worth $1.86 million, to a black hole address (zero address) 16 minutes ago.

  • Vitalik unlocked 845,205 STRK from the Locked Token Grant contract 50 minutes ago

    According to on-chain analyst Yu Jin's monitoring, V God unlocked and received 845,205 STRK tokens worth $1.07 million from the Starknet Locked Token Grant contract 50 minutes ago.

  • Fidelity FBTC holdings exceed 150,000 Bitcoins, with a market value of over $10 billion

    The net inflow of the Fidelity Bitcoin exchange-traded fund (ETF) FBTC was $19.1224 million yesterday. The total historical net inflow of FBTC has now reached $8.67 billion. According to the latest data from Dune Analytics, FBTC's holdings have exceeded 150,000 Bitcoins, currently reaching 151,797 Bitcoins, and the market value of holdings has also exceeded $10 billion, reaching $10.3 billion. So far, Fidelity is the third-largest holder of spot Bitcoin ETFs, second only to Grayscale (287,701 Bitcoins) and BlackRock (275,756 Bitcoins).

  • xAI to complete new round of financing at a valuation of $24 billion

    According to sources cited by Bloomberg, Elon Musk's artificial intelligence company xAI will complete a round of financing in June, with a valuation of over $24 billion after financing. The company originally planned to raise $6 billion this month. It is said that xAI's goal is to raise as much as $6.5 billion and is expected to achieve this goal in the coming weeks.

  • Bitcoin spot ETFs had a total net inflow of $108 million yesterday, continuing a net inflow for 9 consecutive days

    On May 24th, according to SoSoValue data, the net inflow of Bitcoin spot ETF on May 23rd was $108 million. Yesterday, Grayscale's (Grayscale) GBTC had a net outflow of $13.7209 million, and the historical net outflow of GBTC is currently $17.641 billion. The Bitcoin spot ETF with the highest net inflow in a single day is BlackRock's IBIT, with a net inflow of $88.9516 million in a single day, and the total historical net inflow of IBIT has reached $16.171 billion. The second is Fidelity's FBTC, with a net inflow of $19.1224 million in a single day, and the total historical net inflow of FBTC has reached $8.67 billion.

  • The Hong Kong Privacy Commissioner has issued an enforcement notice to Worldcoin, but the Worldcoin Foundation has not yet disclosed whether it will comply with the ruling.

    The Hong Kong Privacy Commissioner for Personal Data has completed an investigation into the Worldcoin project and emphasized on Thursday that a compulsory enforcement notice has been issued to Worldcoin. However, Worldcoin has not disclosed whether it will comply with the regulatory decision, suspend its biometric data collection activities in Hong Kong, or address the concerns of participants. The Worldcoin Foundation, the supporting organization behind Worldcoin based in the Cayman Islands, expressed disappointment with the views of Hong Kong regulators, stating that its operations are legal and aimed at complying with laws and regulations related to data collection and use in Hong Kong and many other markets. The foundation stated that "unfortunately, Hong Kong overlooked these aspects when evaluating the human verification process."

  • Lista Token Economics Disclosure: Total Supply 1 Billion, 10% Airdrop, 40% Community

    On May 24th, Binance Research Institute released a research report on Lista (LISTA), revealing the token economics of LISTA. As of May 23rd, 2024, the total supply of LISTA is 1 billion, and the circulating supply after listing is approximately 230 million (about 23.0% of the total token supply), with Binance Megadrop quota being 100 million (about 10.0% of the total token supply). As for other types of allocation, airdrops account for 10.00% of the total token supply, investors and advisors account for 19.00% of the total token supply, the team accounts for 3.50% of the total token supply, the community accounts for 40.00% of the total token supply, the DAO Treasury accounts for 8.00% of the total token supply, and the ecology accounts for 9.50% of the total token supply.