Uniswap [UNI] has long been the undisputed king of the DEX sector, drawing droves of users after the collapse of FTX and growing disillusionment with centralized exchanges. With an impressive 67% market share, Uniswap seemed untouchable. However, the expiration of its v3 license could signal trouble on the horizon.
A challenger appears
As Uniswap’s development activity continues to decline, its dominance of the DEX market may be threatened by the emergence of copycats and clones seeking to compete with the pioneering DEX. But despite these challenges, UNI soldiers on, continuing to make improvements and solidify its position in the marketplace.
Before launching its v3, Uniswap operated under a restrictive Business Source License (BSL), allowing the platform to protect its source code and limit unauthorized commercial use for a limited time period. However, with the expiration of this license, the future of Uniswap’s dominance remains uncertain.
Source: Delphi Digital
In contrast, Uniswap’s V2 was launched under the General Public License (GPL) which allowed anyone to clone Uniswap’s source code. This affected Uniswap greatly as one of DEX’s competitors, SushiSwap [SUSHI] took advantage of this and cloned the protocol code to a large extent.
SushiSwap took away a large amount of Uniswap’s liquidity and attracted new users. This phenomenon is also known as a “vampire attack.”
To prevent future vampire attacks, Uniswap started to operate under the BSL. However, the contract was only for two years. After which, Uniswap’s Business Source License will be turned into a General Public License indefinitely, which would allow anyone to copy their source code.
The expiration of the license means that other competitors of Uniswap, such as SushiSwap, Curve [CRV], and Balancer [BAL] can use the tools in Uniswap’s arsenal and improve their own protocol.
How will UNI fight back?
Uniswap could improve its competitiveness among other DEXs by releasing an upgraded version of its protocol in the near future.
Nevertheless, it has been observed that the number of daily active developers contributing to the Uniswap protocol and the frequency of code commits to its GitHub have started to decrease.
This suggested that Uniswap could still take some time before coming to the market with a new product.
Source: Token Terminal
UNI, however, remained unaffected and its prices continued to soar. Despite rising prices, the network growth and velocity of the token declined, which could be a cause of concern for holders.
Source: Santiment
Jenny Zheng, cofounder of Blockcast.cc commented and concluded: “The expiration of Uniswap’s BSL is a significant event for the DEX market, as it could lead to increased competition and further fragmentation. While Uniswap could release an upgraded version of its protocol in the future, the decline in developer activity and the slowdown in token growth could be cause for concern. UNI will need to continue to innovate and improve to maintain its position as a leading DEX in a crowded and rapidly evolving market.”
