The US dollar-Japanese yen (USD/JPY) pair has replaced the bitcoin-dollar pair (BTC/USD) as the most traded on decentralized finance (DeFi) leveraged trading platform Gains Network.
Gains Network, initially released on Polygon and later on Arbitrum, allows users to trade financial derivatives of cryptocurrencies, foreign currencies and commodities by matching buy-sell orders using smart contracts.
The USD/JPY pair has a recorded trading volume of $21.64 million over the past 24 hours, almost 40% more than BTC/USD’s $15.51 million and the highest of any asset, according to data sourced from Dune Analytics. GBP/USD is the third most traded pair, with EUR/JPY taking fifth place.
The dollar-yen pair is also the fourth most traded pair over the past thirty-seven days.
These numbers show a growing interest in trading traditional markets via the DeFi rails. That said, the daily turnover of the global currency market is worth over $7 trillion. Bringing a significant portion of that market onto a decentralized platform is easier said than done, given the scale issues.
Traders are betting millions on the yen’s strength
Early Thursday, some traders took significant leveraged short positions in USD/JPY and EUR/JPY pairs on Gains’ Arbitrum-based platform, betting on the appreciation of the Japanese yen.
Perhaps these market participants expect the Bank of Japan to intervene in the currency markets to halt the yen’s decline. The yen bulls have had nothing but disappointment this year, with USD/JPY rising 14.7% to 150.00. The way USD/JPY options have been priced recently indicates expectations for wild swings in the exchange rate.
“Someone betting big on @GainsNetwork_io on a Bank of Japan intervention in the JPY fx markets,” pseudonymous market watcher DefiMoon said of the BoJ has made a big step.”
“These are probably the largest fx trades on gTrade since the launch of the platform,” DefiMoon added.
The USD/JPY seller posted $179.6K in collateral to raise a bearish bet worth $8.26 million. The EUR/JPY short position is worth $8.48 million.