Liquidity is more like a commodity without a moat, and other DeFi projects finally have the opportunity to dig in from Uniswap.
Written by Delphi Digital, cryptocurrency research institute Compiler: Lu Jiangfei
The end of the first phase of mining at Uniswap, the leading decentralized trading platform, is a big event for the DeFi world. This unicorn in the decentralized world has recently been ranked as the largest DeFi protocol with more than $3 billion in locked positions. However, this also means that once Uniswap has any trouble, it may have a ripple effect in the crypto market.
With the end of Uniswap mining, its cascading effect has appeared.
First of all, Uniswap’s own lock-up volume quickly declined sharply. According to OKLink data from OKLink, as of 16:30 on November 17th, Uniswap’s total lock-up volume was approximately US$1.85 billion, a drop of 42.16% the day before delivery. Among them, the liquidity of ETH, WBTC, USDT and other tokens all dropped significantly. At this time, the total liquidity of ETH was approximately US$768 million, a 46% decrease from the previous day. The total liquidity of WBTC and USDT was US$194 million and 191 million US dollars, a decrease of approximately 59% and 41% respectively. The total liquidity of USDC and DAI also fell by 56% and 35%.
In view of Uniswap’s deep-rooted position in the decentralized exchange market, in addition to the impact on Uniswap itself, the suspension of the liquidity mining incentive plan may also affect the cryptocurrency industry in several ways. In this regard, Anil Lulla, co-founder of Delphi Digital, a cryptocurrency research organization, wrote a report that pointed out the possible “butterfly effect” of Uniswap’s closure:
Delphi Digital believes that liquidity is more like a commodity without a moat, so with the end of UNI token incentives, other DeFi projects and income farming farms now finally have the opportunity to dig a wall from Uniswap and take away some of the liquidity. .
Sushiswap may become the biggest winner
Delphi Digital pointed out that Sushiswap is an amazing project in the DeFi industry. SushiSwap initially encouraged users to provide Uniswap LP tokens to its platform in exchange for SUSHI token rewards. However, after the fork, SushiSwap redeemed the remaining LP tokens on Uniswap and used the underlying asset as the SushiSwap fund pool. fluidity. This operation allowed Sushiswap to successfully rob a large amount of liquidity from the Uniswap platform, and at one time its lock-up volume soared to nearly 1.5 billion US dollars. At that time, Uniswap’s lock-up volume plummeted from 2 billion US dollars to 500 million US dollars.
Now, a similar situation has appeared again. Since last week, Sushiswap’s liquidity has seen considerable growth, with an increase of nearly 60%. At the same time, the price of SUSHI tokens soared by more than 100%.
The SUSHI team also seemed to realize that the opportunity was coming. They soon announced that they would add additional rewards to the four liquidity pools that Uniswap no longer provides incentives. The following table shows the recent UNI and SUSHI token investment income estimates.
SushiSwap is not the only beneficiary, Curve may also get a share of it
Delphi Digital provided the following two pie charts. It was found that Uniswap accounted for one-third of the top liquidity mining incentives in the past week. Second, looking to the future, Curve can also get a share of the pie-this also explains why The price of CRV tokens has soared by approximately 72% in the past week.
Good mining aggregator
Delphi Digital pointed out that the market has a lot of speculation about the flow of UNI token assets, which led to the recent rise in the prices of SUSHI and CRV tokens, but at the same time more people began to pay attention to the DeFi income farming market. Delphi Digital believes that for many mining aggregators in the current DeFi market, “Uniswap’s suspension of liquidity mining incentives will help improve industry indicators and market fundamentals.”
What should UNI holders pay attention to?
Either way, UNI holders will not lose the battle for profit farming. There was a Uniswap community conference call last weekend, which focused on the upcoming liquid mining plan and the next steps to be taken. On November 16, the Uniswap community submitted a new proposal aimed at restarting the four liquidity pool reward programs, but the number of rewards will be reduced.
The voting temperature check of this proposal is scheduled to end on Thursday, 11/19. If it succeeds, the proposal will enter the consensus check (Consensus Check). It takes more than five days to enter the consensus check, and at least 50,000 UNI tokens must participate in the voting to officially upgrade the proposal to a governance proposal.
In the next few weeks, Uniswap liquidity providers will most likely not receive any UNI token rewards, so how much will Uniswap lock up volume be lost? Delphi Digital said in the report, “Unfortunately, no one can give a clear answer, because it will depend on what actions other protocols will take. If more and more DeFi protocols follow Sushiswap, then it is likely to see Uniswap There has been a considerable outflow of funds, but I believe Uniswap has the ability to maintain its liquidity and ensure platform stability.”
