A new study from blockchain analytics firm Dune has found that 85% of liquidity on major decentralized exchanges such as Uniswap and PancakeSwap is sitting idle. That inactivity translates to more than $150 million in trading fees that never get collected each year.
The numbers behind the inefficiency
Dune's analysis looked at liquidity pools across the two largest DEXs — Uniswap and PancakeSwap. The study found that the vast majority of deposited assets are not actively traded. Only 15% of the liquidity in these pools actually gets used for swaps, while the rest just sits there, generating no fees for the providers who deposited it.
The $150 million annual figure represents the fees that could have been earned if that idle capital had been deployed more efficiently. It's a big number, but it's spread across thousands of pools and millions of liquidity providers.
For users who supply assets to DEX pools, the study reveals a clear gap: they're leaving money on the table. Liquidity providers earn a cut of the trading fees every time a swap goes through their pool. But if nobody trades against their share, that cut never comes. The Dune data suggests that a large portion of providers are effectively earning nothing, even though they've locked up capital.
Some of the idle liquidity might be intentional — long-term holders who don't mind low returns or who are waiting for price swings. But the study implies that many providers could be better off reallocating their assets to more active pools or using yield optimization tools.
The study does not name specific pools or providers, nor does it prescribe a fix. It simply quantifies the scale of the problem.
An open question for DeFi
The findings raise a practical question: how can DEXs and their users reduce this waste? Currently, most liquidity incentives — like governance tokens or yield farming rewards — are tied to total value locked, not to actual trading volume. The Dune study suggests that rewards are misaligned. Protocols may need to rethink how they incentivize liquidity, perhaps by rewarding 'active' liquidity over 'passive' deposits.
But so far, neither Uniswap nor PancakeSwap has publicly responded to the study. And Dune isn't offering a solution — just the data. Whether the industry will use it to change how pools are designed is something the market will have to decide.
