Uniswap liquidity mining does not allow liquidity providers to increase their profits.
Original title: “Chain News Observation｜Uniswap can mine without relying on liquidity? Lost the profit-seeking farmer, the annualization does not lose SushiSwap”
Written by: Elponcho
Source: ABMedia
Uniswap ended the first round of UNI liquidity mining, and the liquidity providers of the four liquidity pools are temporarily unable to receive UNI rewards. In the recent governance proposals, there are plans for the next round of liquidity mining, but the Uniswap community is quite opposed. Nearly 90% of the votes do not want to “relaunch” or “launch so soon” liquidity Mining.
Does Uniswap really need liquidity mining? Observing the current annualized remuneration available to Uniswap and SushiSwap liquidity providers, we found that Uniswap without liquidity mining seems to be not bad.
Uniswap: Loss of liquidity, transaction volume has not dropped sharply
Chain News observed that after Uniswap stopped liquidity mining, liquidity continued to decrease, but the transaction volume did not drop significantly; while the liquidity of competitor SushiSwap increased significantly, almost returning to September to suck blood The level of Uniswap, although the transaction volume has grown, is still less than one-third of Uniswap.
Observing the DeFi locked-in asset rankings, we found that SushiSwap is the sixth place, while Uniswap has left the first place and became the fourth:
Uniswap community: mining without liquidity, it will not be worse
Community member govro pointed out that the UNI mining rewards actually caused two negative effects:
First, compared with the past data of the four reward fund pools, with the support of UNI rewards, the total liquidity of the four fund pools has been too much higher than the transaction volume, which makes the liquidity provider (LP) The income (UNI + 0.3% handling fee) is lower than the previous income earned only by handling fees.
Second, the issuance of mining rewards also dilutes UNI holders (non-LP). The only benefit of liquid mining is that the total locked value of Uniswap has increased, but the transaction volume has not increased, and the transaction volume is Data that can represent the actual economic value of Uniswap.
For liquidity providers, the expectation is that hot transactions will bring considerable fee sharing, and the additional rewards of liquidity mining are only auxiliary profits. According to the opinion of Uniswap community member govro, we have calculated the “transaction volume/liquidity ratio” before and after the liquidity mining ceased in Uniswap. The higher the ratio, the higher the overall liquidity provider (LP) can get The more transaction fees.
From the results, after the loss of liquidity, Uniswap has little impact on the transaction volume, so the ratio has risen sharply. There are fewer profit-seeking farmers to share liquidity gains, and liquidity providers can get more Transaction Fees. In contrast to Sushiswap, with the substantial increase in liquidity, the transaction volume did not contribute much to the ratio and even slightly reduced the income of the liquidity provider.
Profit comparison of the four liquidity pools
In order to further estimate and verify, Chainnews compared the four UNI mining liquidity pools (WBTC-ETH, ETH-USDT, DAI-ETH, USDC-ETH), after there is no mining reward, how much profit is with SushiSwap difference.
Based on the value of 1,000 US dollars, if in the current situation (11/19 13:00), how much profit can be obtained in Uniswap and Sushiswap respectively: (Uniswap only has a commission share, and SushiSwap is a commission + SUSHI reward )
It can be seen from the above table that, as a liquidity provider, Uniswap participates in ETH-USDT and USDC-ETH pools in illiquid mining, and the profit is still higher than that of SushiSwap with liquid mining. Therefore, it can be verified that under current conditions (liquidity, transaction volume, and governance token price), Uniswap still has certain advantages even if there is no liquidity for mining.
In addition, you must pay attention to the SUSHI mining income of SushiSwap. According to the current system, two-thirds of the warehouse needs to be locked for half a year, which is affected by currency price fluctuations; and the liquidity pool transaction fee income of 0.3% will be split into 0.25% for liquidity For sex providers, another 0.05% needs to be obtained through additional pledge of SUSHI. Therefore, actual benefits will vary depending on user behavior.
Source link: www.abmedia.io
