Uniswap’s decentralized exchange has become one of the crucial points in the decentralized financial sector. The DEX benefited from the first mover advantage after becoming an exchange for new projects and traders in 2020.
At the end of 2020, 400 UNI tokens were distributed to all wallet addresses that had previously provided liquidity at the height of the platform. The spontaneous air drop was worth $ 3,500 north.
By the end of October 2020, the DeFi market had been selling strongly and the UNI price was below the $ 4.00 mark for weeks. However, since the beginning of 2021, the UNI token has gained 335%, hitting a new all-time high of $ 15.35 on January 15. 27
UNI / USDT 4-hour chart. Source: TradingView
Currently, the driving forces behind the increase in UNI price are an increase in the daily volume of transactions on the platform, the increase in the total locked value of the platform and the introduction of governance features as the launch of Uniswap v3 approaches.
The locked total continues to rise
Monitoring the Total Value Locked (TVL) of a DeFi protocol is one of the most important metrics used to determine the legitimacy and participation of the community.
An increasing TVL indicates that users of the platform trust the platform enough to deposit their money in order to receive rewards, and this usually means that the liquidity pools are more competitive than other exchanges in the sector.
The Uniswap platform recently launched a new all-time high TVL of $ 3.16 billion on Jan. 24. This was fueled by a rise in the price of many of the top cryptocurrencies, as well as popular DeFi tokens.
Total value locked in Uniswap. Source: Defi Pulse
Uniswap is now the top DEX in terms of TVL, and when it comes to lending, the platform ranks fourth with Maker (MKR), AAVE and Compound (COMP) leading the way in this space.
Uniswap’s trading volume competes with the major central exchanges
A second driver of UNI’s recent surge is the sharp rise in trading volume on the stock exchange.
Data from Uniswap shows the DEX’s daily volume has been consistently above $ 400 million since early 2021, and the metric rose to a new high of $ 1.3 billion on Jan. 11. With this volume, Uniswap is now competing with some of the major centralized exchanges in cryptocurrency.
Uniswap 24-hour volume. Source: Uniswap
Transactions on Uniswap also outperform direct competitors, and data from Dune Analytics shows that Kyber Network and IDEX were the main competitors in early 2019.
Monthly DEX volume. Source: Dune Analytics
Since then, the number of DEXs has continued to grow, but by March 2020 Uniswap had established itself as the preferred choice for traders and remained the dominant DEX until 2021.
The excitement about the v3 rollout strengthens the UNI price
While many Airdrop recipients were delighted to sell their tokens shortly after receiving them, those who chose to keep them now have the option to get additional benefits by adding governance features.
The Uniswap Treasury currently has $ 500 million, and recently Uniswap founder Hayden Adams asked the community, “What are some of the most effective ways governance can assign this UNI?”
As the list of delegates for the Uniswap platform continues to grow, the demand for UNI tokens is likely to increase as more UNI are locked on the platform for governance purposes.
The excitement about the upcoming Uniswap v3.0 continues to grow. In addition to the new governance functions, solutions for the high gas charges and improvements to the volatile loss structure are expected.
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