Key On-Chain Metrics Highlight Uniswap’s Dominance
On-Chain metrics exploring Uniswap’s TVL, volume market share and revenue
The recent crypto credit crisis showed the resilience built into DeFi protocols. DeFi lending protocols managed to survive while several prominent centralized lenders collapsed. This series of events raised numerous questions regarding the viability of centralized systems in crypto. More recently it was pointed out that the market share of Uniswap in relation to Coinbase has approached a 50/50 split. With this in mind, the article analyzes key metrics for Uniswap highlighting its dominance of the sector.
Uniswap recently managed to surpass Curve as DeFi’s DEX with highest total value locked (TVL). Curve had managed to be DeFi’s top DEX by TVL for over a year, up until May where it started to suffer heavy withdrawals due to the market crash. In the past Curve had benefited from different incentive programs that helped propel its TVL.
This indicator depicts Uniswap’s and Curve TVL change throughout the last month, when Uniswap has managed to increase its TVL by 23% while Curve increased by 13%. In addition, since the beginning of May Uniswap’s TVL has decreased by 24% while Curve dropped 69%. This points out how Curve’s massive withdrawals during the market crash helped Uniswap to close the gap between the two.
In addition to TVL, another important metric to consider is the volume processed by DEXes. This one allows us to gauge the amount of value exchange that takes place on a DEX. The indicator below illustrates Ethereum DEXes market share by volume throughout the last 7 days.
The indicator above shows how the sum of Uniswap V2 and V3 makes up 65% of the total Ethereum DEXes market. This equals to $9.6 billion dollars processed during the past 7 days. Curve follows these two protocols with 14% of the market and $2.1 billion dollars processed during the last 7 days. This metric helps estimate Uniswap’s market dominance for volume processed in the DEXes sector.
While Curve has a close TVL to the sum of Uniswap V2 and V3, Uniswap’s V3 concentrated liquidity model has enabled the protocol to process significantly larger amounts of volume efficiently. This has allowed LPs to obtain attractive rewards without the need of extra incentives from the protocol. It also created a more active and dynamic LP position dilemma.
Lastly, an analysis on the current protocol revenue is helpful in order to understand its current state during the market downturn. The indicator below provides the total protocol revenue since July 2021.
DeFi’s protocol definition of revenue varies, in this case the indicator depicts Uniswap’s fees paid to its LPs. As of now, all trading fees collected by the protocol goes towards the respective LPs. July 2022 is not over yet, but a clear downward trend can start to be noticed after the May 2022 market crash. Furthermore, this helps illustrate DeFi’s major DEXes situation during the market retrace.
While Uniswap and Curve have not always been direct competitors, Uniswap’s shift to fees 0.01% fees for stablecoin swaps has turned the two into rivals. In addition a recent Uniswap phishing attack demonstrated some exposure for NFTs as LP proof. This resulted in the trick stealing of $8M from 74K+ user wallets.
Overall, Uniswap has consolidated its position in DeFi. Managing to surpass Curve in TVL while also maintaining its volume market share. Its revenue decreasing trend further signals major DEXes condition during the market drop.
