DeFi’s explosive growth has helped UniSwap emerge as one of the most popular DEXs today in the market. The UniSwap exchange processes over $1 billion in daily transactions.
On Monday, February 15, decentralized exchange (DEX) protocol Uniswap surpassed $100 billion in the cumulative trading volume being pushed by the DeFi market growth. UniSwap founder Hayden Adams tweeted about the same citing data from Dune Analytics.
— Hayden Adams 🦄 (@haydenzadams) February 15, 2021
The above chart shows UniSwap’s unprecedented growth in less than a year as the first DeFi bull run began last summer. As per data on CoinGecko, UniSwap has processed over $.1 billion in transactions over the last 24 hours. Undoubtedly, UniSwap is the biggest DEX platform and more than twice in size over its immediate competitor SushiSwap. In another major milestone, UniSwap has now crossed $4 billion in total value locked (TVL).
Besides, UniSwap’s native UNI DeFi token has registered solid growth so far in 2021. The UNI DeFi token price has surged nearly 350% year-to-date and is currently trading at $20.89 with a market cap of $6.27 billion.
Influence of DeFi Space Growth on UniSwap
In the DeFi space, UniSwap enjoys the first-mover-advantage and is thus the most popular DEX currently in the market. With DeFi’s explosive growth in the last eight months, DEXs have seen their volumes grow at a very rapid pace. As DeFi governance tokens gain huge popularity, the DEXs are now challenging the dominance of centralized exchanges.
However, the surge in the massive trading activity in the DeFi space comes at a cost. Most of the decentralized exchanges (DEXs) are based on the Ethereum blockchain network. Thus, with the rapid surge in on-chain transactions, there’s a simultaneous surge in transaction fees.
During the peak overload period, the transaction fee on UniSwap skyrockets to above $100. Explaining this surge in fee, Ilya Abugov, advisor at DApp statistics aggregator DAppRadar, told CoinTelegraph:
“It’s a combination of several factors: new projects listing through DEXs, liquidity mining, deeper project integrations and more. The high gas costs don’t impact whale users as much, and they account for a large portion of DeFi volume.”
The developments around Ethereum 2.0 are critical to controlling this rapid surge in transaction fees. With the massive network activity, Ethereum miners have been having a great time. So far in 2021, the average transaction fee on the Ethereum blockchain has surged 5x. Last week, Ethereum miners minted more than $3.5 million in a single hour as per data on Glassnode.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.