{"id":116463,"date":"2020-11-20T18:07:00","date_gmt":"2020-11-20T15:07:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/uniswap-fights-back-as-competitors-drain-value-from-the-dex\/"},"modified":"2020-11-20T18:07:00","modified_gmt":"2020-11-20T15:07:00","slug":"uniswap-fights-back-as-competitors-drain-value-from-the-dex","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/uniswap-fights-back-as-competitors-drain-value-from-the-dex\/","title":{"rendered":"# UniSwap fights back as competitors drain value from the DEX"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a291801c2eab\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a291801c2eab\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/uniswap-fights-back-as-competitors-drain-value-from-the-dex\/#Can_DEXs_fall_out_of_favor\" >Can DEXs fall out of favor?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/uniswap-fights-back-as-competitors-drain-value-from-the-dex\/#Changes_incoming_for_Uniswap\" >Changes incoming for Uniswap?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/uniswap-fights-back-as-competitors-drain-value-from-the-dex\/#DeFi_is_here_to_stay\" >DeFi is here to stay?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/uniswap-fights-back-as-competitors-drain-value-from-the-dex\/#Its_not_DEX_vs_CEX\" >It\u2019s not DEX vs. CEX<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># UniSwap fights back as competitors drain value from the DEX <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjAtMTEvOWFlZjhkMDUtN2I2OC00OWE3LTg1ZGUtYTAwNTZjMzlhMWI2LmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>Just a few months ago, the global finance sector witnessed the meteoric rise of yield farming, which in large part helped to spur the growth of the decentralized finance domain. During Q3 2020 alone, the DeFi market ushered in significant growth for many stablecoins compatible with Ethereum (ETH), such as MakerDAO\u2019s Dai.<\/p>\n<p>According to information released by crypto market data aggregator Messari, the overall supply of the Dai stablecoin increased by a mammoth 623% during Q3, propelling the token\u2019s value above $1 for 120 days running. The report also goes on to add that 65% of Dai\u2019s entire token supply is currently being used for yield farming purposes across various DeFi protocols.<\/p>\n<p>That being said, it <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ears as though liquidity incentives on the Uniswap decentralized exchange have dried up, with the platform recently offloading 40% of its liquidity within a period of just 48 hours before the conclusion of its UNI liquidity rewards program on Nov. 17. This has resulted in many users switching over to rival platforms such as Sushiswap.<\/p>\n<p>Regarding the situation, Carlsbad Sunshine, CEO at LID Protocol, a platform providing solutions for depositing liquidity into Uniswap, told Cointelegraph that all DeFi projects follow a hype cycle with ups and downs. The key is continued growth in each cycle, which is clear in the case of Uniswap, according to him:<\/p>\n<blockquote><p>\u201cThat\u2019s why we\u2019re still using Uniswap to lock liquidity. It\u2019s the largest platform by far, but there\u2019s a huge number of scams running on it. Ideally Uniswap would upgrade itself with better features to indicate which tokens have liquidity locking and which don\u2019t. My personal opinion is Uniswap is going to be around for a long time, and pooling may evolve, but it\u2019s not going to end.\u201d<\/p><\/blockquote>\n<h3><span class=\"ez-toc-section\" id=\"Can_DEXs_fall_out_of_favor\"><\/span>Can DEXs fall out of favor?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Providing his views on this latest liquidity crisis, Kyn Chaturvedi, chief business development officer at TomoChain, a scalable blockchain platform that also runs TomoDEX, told Cointelegraph that when it comes to liquidity-based incentives, the customers will flock to where the rewards are. He added:<\/p>\n<blockquote><p>\u201cTo think that liquidity is going to dissipate and move back to CEXs makes little sense. It\u2019s more likely the liquidity will slosh around DeFi to seek alpha. Why? The trustless, anonymous, easy access nature that comes with DEXs\/DeFi works and because Centralized Exchanges have been far less secure with recent high profile hacks and accusations of fraudulent activities.\u201d<\/p><\/blockquote>\n<p>That being said, Chaturvedi did acknowledge that while a fair share of scammy DeFi projects have cropped up over the last six months or so, the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> as a whole has so much potential that consumers have not lost their confidence in it. <\/p>\n<p>Nischal Shetty, CEO of India-based crypto exchange WazirX, believes that the primary intention behind liquidity farming from the very start was to simply attract users, giving them an opportunity to try out DEXs and understand how to use them: \u201cSo despite the initial drop in liquidity when the mining rewards stop, I don\u2019t think there will really be a decline in usage because the people who want to buy\/sell crypto via a DEX, and have discovered the DEX, will stay back.\u201d<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Changes_incoming_for_Uniswap\"><\/span>Changes incoming for Uniswap?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Following a sharp decline in Uniswap\u2019s liquidity, many of the platform\u2019s token holders submitted a fresh governance proposal to deploy a new rewards program. In this regard, a proposal <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/snapshot.page\/#\/uniswap\/proposal\/QmaKjvEAUL5RxoZeNQJKJZR8rHxiE6XNzzVrm1oLCr69MV\">put forward<\/a> by blockchain-powered music streaming provider Audius seeks to reduce the total number of UNI reward tokens to half as compared with previous incentive schemes.<\/p>\n<p>While previously, 2.5 million UNI tokens were distributed among liquidity providers of Uniswap\u2019s WTBC\/ETH, USDC\/ETH, USDT\/ETH and DAI\/ETH pools per month, the new proposal will effectively cut this reward number into 1.25 million UNI for the next two months \u2014 working out to around 4.6% of UNI\u2019s current token pool.<\/p>\n<p>As things stand, the proposal has more or less passed the first round of voting. However, in order for the proposal to come into full effect, it needs to undergo another two rounds of voting and secure a bare minimum of 40 million \u201caffirmative votes\u201d in order to be implemented. <\/p>\n<p>Lastly, UniSwap\u2019s proposal went live at the same time rival DEX SushiSwap <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/twitter.com\/SushiSwap\/status\/1328404014078308353\">announced<\/a> a new incentive scheme for providing liquidity to the exact four pairings that Uniswap stopped providing benefits for. Also, it should be pointed out that ever since governance on UniSwap went fully decentralized back in mid-September, the platform has failed to pass a single governance proposal.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"DeFi_is_here_to_stay\"><\/span>DeFi is here to stay?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The advent of governance tokens has not only incentivized members of the entire crypto industry to educate themselves but also jump-started the concept of DEXs as a whole. Monetarily speaking, they are also the reason as to why the crypto industry has <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/defipulse.com\">gone<\/a> from $1 billion in total value locked in DeFi at the end of 2019 to well above $13.5 billion. <\/p>\n<p>In Chaturvedi\u2019s view, a broader scope should be used to determine what DEXs are hoping to achieve, since most of these platforms intend to lock liquidity in order to build next-generation financial instruments on top of them: \u201cDone right, TVL won\u2019t be limited to serving just the crypto space. It\u2019ll be the genesis of a new financial paradigm that will allow the rest of the non-crypto world to access global liquidity at scales unseen in our history.\u201d<\/p>\n<p>Not only that, since DEXs by their very nature should be highly transparent and trustless, the scope for cheating \u2014 which most mainstream financial institutions possess \u2014 can almost be eliminated. Not only that, even returns on paper can be higher for lenders, and lower for borrowers.<\/p>\n<p>Lastly, as a by-product of the DeFi boom, it seems as though governance tokens are now being used for reasons they were originally intended for: to help a project\u2019s community make better decisions by giving users a say on matters affecting the platform. Speaking on the subject, Shetty opined: \u201cEven if the rewards continue, it\u2019s a good sign because you\u2019re giving people what they expect from the product. It\u2019s a win-win situation for the token as well as the ecosystem.\u201d<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Its_not_DEX_vs_CEX\"><\/span>It\u2019s not DEX vs. CEX<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Centralized and decentralized exchanges are often pitted against each other as direct competitors. However, users have a clear choice \u2014 if people don\u2019t want to custody their crypto on their own, then a centralized exchange is the right option for them. If people want to hold their crypto by themselves, then decentralized exchanges are the way to go. So it may be the case that the recent UniSwap liquidity loss is not going to hamper the progress of DEXs.<\/p>\n<p>Additionally, it should possibly be a conversation about how the two types of exchanges can co-exist in relation to various crypto audiences. That being said, Sunshine believes that in the future, DEXs will supersede the growth of CEXs. For example, he pointed out that Uniswap V3, Ethereum 2.0 and UNI governance are right around the corner, a development that will most likely continue to fuel the rise of DeFi:<\/p>\n<blockquote><p>\u201cDEXs continue to release in competition to Uniswap, and 3rd party platforms such as Crypto wallets will help fuel this transition via DEX aggregator services. What we\u2019re seeing isn\u2019t just a momentary hype phase, but rather an evolution.\u201d<\/p><\/blockquote>\n<p><template data-name=\"subscription_form\" data-type=\"defi_newsletter\"><\/template><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener noreferrer\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/uniswap-fights-back-as-competitors-drain-value-from-the-dex\" target=\"_blank\" rel=\"noopener noreferrer\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# UniSwap fights back as competitors drain value from the DEX &#8221; Just a few months ago, the global finance sector witnessed the meteoric rise of yield farming, which in large part helped to spur the growth of the decentralized finance domain. During Q3 2020 alone, the DeFi market ushered in significant growth for many&#8230;<\/p>\n","protected":false},"author":1,"featured_media":116464,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s3.cointelegraph.com\/uploads\/2020-11\/9aef8d05-7b68-49a7-85de-a0056c39a1b6.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74860,75916,4965],"class_list":["post-116463","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-cryptocurrency-exchange","tag-dex","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/116463","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=116463"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/116463\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/116464"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=116463"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=116463"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=116463"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}