Uniswap: King of the DEXes & Now King of Ethereum DeFi

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Total value locked (TVL), i.e. assets under management, is the keystone metric in Ethereum’s young and rising decentralized finance, or DeFi, arena.

Coming into 2020, lending protocol and Dai stablecoin-backer MakerDAO was DeFi’s reigning project with the largest TVL. But this year we’ve seen Maker flipped and projects like Compound and Aave acutely reaching into DeFi’s top-project status.

This brings us to Uniswap, the Ethereum community’s darling decentralized trading protocol that, for the first time ever, became the largest DeFi project this week in reaching a TVL of +$1.75 billion USD.

Accordingly, Uniswap has unquestionably become one of Ethereum’s brighest early projects in rapid fashion, and at this point it seems the permissionless trading protocol is only just beginning to ramp up.

Uniswap on Top

On Thursday, August 3rd, Uniswap surged to a TVL above $1.77 billion on the heels of being among the hottest projects in DeFi in recent months.

That push put Uniswap decidedly above the DeFi space’s other top projects for the first time ever, with the new top 10 currently looking like so according to analytics site DeFi Pulse:

  1. Uniswap ($1.77 billion TVL)
  2. Maker ($1.55 billion TVL)
  3. Aave ($1.47 billion TVL0
  4. Curve Finance ($1.17 billion TVL)
  5. yEarn ($906 million TVL)
  6. Synthetix ($862 million TVL)
  7. Compound ($705 million TVL)
  8. Balancer ($688 million TVL)
  9. WBTC ($448 million TVL)
  10. RenVM ($238 million TVL)

The move into the top of DeFi comes as 1) the DeFi arena has been hotter than ever activity- and interest-wise in recent months, and 2) DeFi “yield farming” has exploded as a popular cryptonative earning opportunity.

That said, a non-trivial part of Uniswap’s acute ascension has been the launch of SushiSwap, a Uniswap fork with added $SUSHI token economics that in part rewards Uniswap liquidity providers and ultimately attempts to poach them.

Accordingly, yield farming opportunities have been drumming up tremendous participation lately, and many users have been freshly trading into assets via Uniswap to stake in SushiSwap’s rewards pools.

Of course, that’s just the short-term analysis. Zooming out, over the past two years Uniswap has become a tour de force in DeFi, and it’s seemed all but inevitable in recent months that the increasingly popular trading protocol was going places.

An Unstoppable DEX

2020 has been a tremendous year for Uniswap so far. For example:

  • The protocol’s volume boomed ~225% in Q1 2020 compared to Q4 2019.
  • U.S. crypto exchange giant Coinbase split a portion of a 1.1 million USDC allocation into a Uniswap liquidity pool via the Coinbase USDC Bootstrap Fund in April.
  • In May, the project’s builders rolled out Uniswap V2, a next-gen upgrade over the protocol’s first rendition that has since helped launched DeFi into overdrive.
  • Representing an upgrade over 2017’s ICO phenomena, Uniswap has become home to “Intial DeFi Offerings” this year, starting with the UMA Protocol’s public listing of the $UMA governance token.
  • Over the summer Uniswap achieved the status of listing more tokens than its top 10 DEX competitors at the time.
  • The protocol’s team raised $11 million in Series A funding in  June.
  • The DEX added nearly 60,000 users in July.
  • Growing interest in the project led to the recent creation of UNISWAP-PERP, a perpetual futures contract offered by crypto exchange FTX that tracks the top 10 Uniswap liquidity pools.
  • Last but not least, between August 29th and August 30th Uniswap reached a 24-hour trading volume record of $426 million. For perspective, Coinbase only powered $348 million in volume in that same span. This occasion marks the first time Uniswap has flipped Coinbase in 24-hour volume, but it most certainly won’t be the last time that the protocol bests prominent centralized crypto firms like Coinbase when it comes to activity.

The takeaway? Uniswap is having a breakout year and is currently on track to become a mainstream hit.

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