In September, as Sushi opened the prelude to directly grabbing liquidity, the competition for DEXs became increasingly fierce. If a project does not issue coins, then liquidity may be directly removed by mining projects with higher returns. Therefore, in the end, Uniswap, the leader of DEX, was also “forced” to issue its own token. UNI tokens have finally achieved a kind of universal participation effect due to the mechanism of issuing coins and DeFi in the past few months. On that day, the gas cost of Ethereum was as high as 900, causing continuous congestion. We will look at the DEX trading situation in September from the macro transaction data, and then elaborate on the progress of each project.
DEX transaction data overview
The above figure shows that the overall transaction volume of DEX has exceeded US$20 billion in September, and the month-on-month growth rates in the three months of 1989 and 1989 were 175%, 160% and 83% respectively. Although the growth rate is slowing down, in terms of amount, DEX shows its strong potential.
DEX has entered a stage of explosive growth in trading volume from 2020. There are several important reasons:
1) Uniswap, Balancer and other AMMs create capital pools and add liquidity without review: this model is the key to new projects issuing tokens to bypass centralized exchanges, and is the technical cornerstone of the current liquidity grab battle.
2) Liquidity mining: DeFi’s mining enthusiasm has been detonated from the currency distribution model of Compound using deposits and loans to obtain COMP. Now it is basically “no mining and no DeFi”.
3) Liquidity robbery: Sushi opened the era of liquidity mining and looting. Uniswap, which did not issue tokens, became the fat in the eyes of robbers. Even Curve, which has issued tokens, is also labeled as a community issue, directly FORK without pre-mining projects. The tokens of these new projects contributed a lot of transaction volume.
The migration of tokens from centralized exchanges to DEXs caused by liquidity mining, until the subsequent liquidity wars and frequent occurrence of new coins, formed a situation where the trading volume in the above figure was explosively rising.
The above picture shows the trading situation of DEX in September. There are some phenomena worth noting:
1) Uniswap has a great success, and its transaction volume and number of transactions have been significantly ahead of all other DEXs. The transaction volume in September was as high as 13.8 billion U.S. dollars, which was an increase of 104.5% from August’s 6.7 billion U.S. dollars. Its transaction volume in September was much higher than the second place Curve’s $4.85 billion. Uniswap has 190,000 transaction addresses, an increase of 32.8%, which is much higher than the second Kyber’s 5,000 addresses.
2) The top three exchanges are all AMM, each of which has outstanding features: Uniswap is the simplest, Curve stable currency trading has the lowest slippage, and Balancer’s liquidity pool can be set to any ratio. The most important feature of Uniswap and Balancer is to add a liquidity pool without permission, which is now the preferred trading place for all new DeFi projects.
3) The number of transactions (the number of unique addresses) in all the lower-ranked DEXs has declined, and the magnitude is large, which is in sharp contrast with the growth of the head. The main reason is that imitations are concentrated in Uniswap and Curve, which contribute to the transaction volume and number of transactions of both, while diluting the participation of other projects.
Uniswap (UNI), #39
Progress in September:
Uniswap did one thing in September, issuing UNI tokens.
· Issuance plan: The total amount of UNI tokens is 1 billion, 40% for the team, VC, and consultants, there is a 4-year unlock period, and 60% for the community. After 4 years, the total annual increase will be 2%.
· Airdrop: 150 million UNI in the community will be airdropped directly to all historical users, liquidity contributors and Uniswap socks purchasers, of which 49 million will go to all liquidity providers, counting from the day V1 goes online; 100 million will be for all The users who have interacted, each address is 400 UNI, there are a total of 250,000 addresses; 220,000 is for all users who have bought socks.
· Mining: Currently four pools of liquidity mining are opened: USDT/ETH, DAI/ETH, USDC/ETH and WBTC/ETH. In the next two months, each pool will be allocated 5 million UNI.
· Governance: Starting from October 17th, community governance began. UNI holders can vote to decide how to allocate 43% of the community treasury, including whether to increase the liquidity mining pool and the number of allocations.
view:
Uniswap’s token issuance is a landmark event. If there is still controversy over whether a good project needs to issue tokens to cut leeks, then the “urgent” issuance of UNI at least shows that even the best projects need to issue their own tokens. Whether the token is really “useful” in the project is no longer the primary issue. It can be governed, can be mined, and can increase the stickiness of users to the project seems to become more important.
According to Uniswap’s transaction data in the last 24 hours, 8 of the top 20 tokens by transaction volume are DeFi project tokens issued in the last two months, which is enough to see the popularity of DeFi and the importance of listing tokens without permission.
The above picture shows Uniswap’s lock-up volume. The current lock-up volume of US$2.21 billion occupies the top spot of all DeFi projects, which is higher than the second-place Maker’s US$1.97 billion. The figure shows that Uniswap’s lock-up volume has rapidly increased, fallen, and increased again around September. The corresponding events are Sushi issuance, Sushi liquidity migration and UNI issuance. So, is Sushi really “robbing”? In fact, this is not the case. After Sushi migrates its liquidity in the picture, Uniswap still has more locked positions than before the start of the Sushi project. Sushi actually accelerates Uniswap’s embrace of the current DeFi liquidity mining boom.
Another interesting phenomenon is that Uniswap’s airdrop has basically been received three days before, nearly 180,000 addresses. It is foreseeable that nearly 70,000 of the 250,000 airdrop addresses, most of them, maybe 80%, may not be retrieved for various reasons. According to the calculation of 5 US dollars per UNI, nearly 112 million US dollars are lost. .
October plan:
The Uniswap team started recruiting personnel for the development of v3 a few months ago. Recently, the main creator Hayden announced some features of Uniswap in the direction of Ethereum’s 2nd layer: 1) It can be compatible with the existing Ethereum infrastructure; 2) Large-scale Extensibility; 3) Compatibility with other 2-layer DApps, etc.
Sushiswap (SUSHI), #67
Progress in September:
Since the establishment of the Sushiswap project on August 25, it has only been a month, but the waves caused by the project can be described as magnificent. Let’s sort out the entire event from the timeline:
· Issuance of tokens: There is no upper limit on the total amount of SUSHI tokens at the beginning. 1,000 SUSHI will be produced per block in the first two weeks. After two weeks, the output rate will drop 10 times, which is 100 SUSHI per block. 10% of the SUSHI produced will be directly given to the developer ChefNomi. In the future, of the 0.3% of Sushiswap’s processing fees, 0.25% will go to liquidity providers and 0.05% will go to SUSHI holders, that is, to pledge SUSHI to hold xSUSHI.
· Founder sell-off: The anonymous founder of Sushi sold all his 2.56 million SUSHI tokens for 18,000 ETH (approximately US$6 million) on September 5, which caused strong dissatisfaction in the community. On September 6, ChefNomi handed over control to FTX founder Sam Bankman-Friend (SBF).
· Migration: On September 10, nearly $1 billion completed the migration following Sushiswap. SBF transferred power to nine multi-signatures voted by the community. On September 11, SBF issued 2 million SUSHI, which were airdropped to liquidity providers supporting the migration.
· The founder returned tokens: On September 11, ChefNomi returned 38,000 ETH to the project, worth 14 million US dollars. The funds were voted by the community, and SUSHI tokens were repurchased in the SUSHI/ETH pool on September 15.
· Community governance: On September 9th, the community voted to reduce the output of SUSHI, and locked 2/3 of the newly minted SUSHI for one year. On September 18, the community proposed to add a rotating incentive pool to increase the liquidity of the fund pool and attract new users. The incentive pool is selected by the community, a batch of 10 fund pools in total, and the next batch is replaced after 7 days of operation.
view:
Sushiswap is a very controversial and dramatic project.
In essence, Sushi only has the liquidity migration code written by the founder ChefNomi, and its transaction fee distribution scheme is the same as Uniswap, except that it allocates 0.05% of Uniswap to its team in the future to SUSHI holders. Yes, and the founder of Sushiswap took 10% of SUSHI. This distribution method seems fair, but it is also the fundamental reason why ChefNomi can stage a sell-off.
From the very beginning, it was to grab liquidity. Uniswap had not issued any coins at the time, and it was the most fragrant meat of all DEX. Before the start of the Sushiswap project and after the completion of the migration, Uniswap’s liquidity was US$300 million and US$500 million, respectively. So in terms of results, Sushiswap actually increased Uniswap’s liquidity.
The figure above shows the liquidity situation of Sushi. It can be seen that after migrating USD 1 billion on September 9, Sushiswap experienced a short period of growth, reaching a peak of USD 1.46 billion. After Sushi’s liquidity mining decreased, liquidity decreased rapidly, and is currently only stable at around 430 million US dollars. Comparing Uniswap’s liquidity graph, we can find that the liquidity part of Sushi has returned to Uniswap after the migration. There are two main reasons for this: 1) The liquidity provider is profit-seeking. When Sushi cannot provide sufficient income, liquidity Providers will migrate; 2) Project stickiness. The preferred platform for most new DeFi mining projects to issue their own tokens is still Uniswap. This can also be seen from the number of top 20 new coins in transaction volume. In addition to SUSHI, there are only two tokens issued in the past two months, while Uniswap has eight.
The above picture shows the transaction volume of Sushiswap. Since the migration, the transaction volume has fallen all the way. According to preliminary estimates, Sushiswap had nearly US$2.07 billion in transaction volume in September, ranking third among all DEXs. But the key issue is that, in accordance with this downward trend in trading volume, Sushiswap in October is obviously difficult to compete with Uniswap.
October plan:
Sushi’s latest proposal, BentoBox, is to use trading pairs as a lending pool, with two coins invested, one more and the other empty. The characteristic is that it can directly borrow and recycle in one step, the leverage is fully used, and each transaction pair is independent, avoiding systemic risks. The success of the project requires the community to pay a total of 100,000 SUSHI as a reward for code development.
Balancer (BAL), #95
Progress in September:
· FeeFactor and ratioFator: Same as before.
· WrapFactor: The soft anchor is reduced from 0.7 to 0.2, and the hard anchor is still 0.1.
· BALFactor: Cancel the original 1.5 times calculation formula for BAL, and instead take out 31% of the 145,000 BAL distributed every week, which is 45,000 BAL, to BAL/WETH, BAL/DAI, BAL/USDC and BAL /WBTC.
· CapFactor: divide the original cap into five standards, cap1 to cap5, which are US$1 million, US$3 million, US$10 million, US$30 million and US$100 million. The original tokens on the whitelist default to cap3 , Which is 10 million U.S. dollars, and the tokens that enter the whitelist are initially cap1, which is 1 million U.S. dollars. All adjustments to the token cap level must be voted by the community. The proposals that have been voted on include: increasing MKR from cap3 to cap4, removing DZAR from the whitelist, reducing RPL from cap3 to cap2, and increasing UNI and PERP from cap1 to cap2.
· Whitelist: Balancer will only guarantee the basic smart contract compatibility between the token and the agreement, and the risk of the project is left to the judgment of the liquidity provider.
·Multi-path order routing: Balancer has updated the order matching function across multiple pools, which means that even if there is no direct trading pair, the transaction of two tokens can be completed in one order.
view:
When Balancer is playing hot in other war zones, it has also increased the distribution ratio of its own token BAL, which to a certain extent shows that Balancer feels the pressure from the market and strives to increase people’s motivation to hold BAL. On the other hand, the fine-tuning of various factors will be a daily event that accompanies the BAL distribution, indicating that the team still pays attention to the fairness of its BAL distribution, because after all, fairness is a foundation that can allow the project to survive for a long time.
The cross-pool trading function should be a standard configuration of AMM, and Balancer has finally been updated.
October plan:
The team sponsored the upcoming ETHOnline hackathon and proposed some ideas for the future development of Balancer: dynamic fee pool; self-starting liquidity pool curve and UI; exchange of BPT and underlying assets; loyalty pool: early LP can Get more BPT, and LPs who withdraw later can get more tokens for each BPT.
Curve (CRV), #126
Progress in September:
Curve’s energy is focused on operations and governance.
· Operation: The US exchanges Gemini and Kraken have launched CRV; BitMax will soon list CRV; and reached a cooperative relationship with the Curve fork project S.Finance.
· Governance: Through governance, Curve added 2 new trading pools. The first pool is hBTC/wBTC trading pool with a liquidity of 16,778,491 USD and a mining yield of 21.90%. The second pool is 3Pool, trading pairs It is DAI/USDC/USDT, the liquidity is 296,831,084 USD, and the mining yield is 49.35%.
Now each transaction pool begins to charge management fees, that is, 50% of the transaction fees are taken as management fees. The current consensus is to use management fees to buy back CRV tokens, and then distribute these repurchased CRV tokens to VeCRV holders people. The specific distribution method and distribution share need to be decided by the DAO second vote.
Curve Emergency DAO was established with 9 members. The community can increase/change/decrease the members of CED through Curve DAO.
· Swerve fork event: The Curve imitation that appeared in early September, with a total of 33 million tokens, was released through liquidity mining. 9 million pieces were released in the first 2 weeks, 9 million pieces were released in the following year, and 3 million pieces were released each year from the second to the sixth year. Therefore, in the first two weeks of Swerve’s liquidity mining, part of Curve’s liquidity was attracted to Swerve. At its lowest point, Curve’s liquidity was reduced by about $300 million. Two weeks later, the mining yield of Swerve decreased, and Curve’s liquidity gradually recovered. Serve liquidity robbery failed.
view:
After Curve released the Boost plan in August, the pledged CRVs rose rapidly, and the pledged CRVs currently account for 16% of the current circulation. The current start-up management fees and community discussions to provide rewards for CRV liquidity holders on other DEXs are all aimed at encouraging users to hold CRVs, pledge them, and reduce the circulation of CRVs to alleviate the high release of CRVs. The team has done a good job in motivating users to hold CRVs.
The number of voters who participated in the 11 proposals released in September did not exceed 20. On the one hand, it is because the cost of participating in governance is too high. On the other hand, some VeCRV holders only care about mining revenue and do not care about the progress of the project. . It is worth noting that the addresses controlled by Yearn.finance hold about 10% of the total VeCRV, and the founder address of Curve accounts for about 6%. These two addresses will be decisive in the September DAO vote. effect. It can be seen that the current online governance is only a means of controlling projects by large households, and cannot achieve true decentralized governance.
October plan:
Governance remains the main task of Curve. The governance solutions currently discussed in the community include: rewarding ETH/CRV trading pair liquidity providers on Uniswap; adding GUSD, HUSD, USDK and other poorly liquid stablecoins to 3Pool; and changing trading pool parameters and adding trading pools.
*Note: 0x, Kyber Network, Bancor have no significant progress.
to sum up
“One day in amber, one year in the world”, this sentence is the most appropriate to describe the DEX during this period. From the forked Uniswap of Sushi to all kinds of swaps produced by the forked Sushi, we can see that liquid mining can attract users, but it is not enough to retain users. The market continues to develop in the small product innovation, and the soup is not changed. The imitations of drugs will eventually be eliminated by the market.
