Uniswap, the most widely used decentralized exchange (DEX) at Ethereum, surpassed Coinbase in daily volume on August 30. The explosive growth of the Decentralized Finance (DeFi) market has pushed many avid investors to DEX over centralized exchanges.
According to Uniswap data, the platform processed USD 426 million in 24-hour volume. In the same period, Coinbase Pro registered a volume of USD 349 million, according to CoinMarketCap data.
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Why is Uniswap’s popularity increasing so rapidly?
Since June, the total value insured on DeFi protocols has increased from $1 billion to $7.7 billion, according to Defipulse.com.
After the rise, many small tokens related to DeFi emerged, especially governance tokens. Before they are included in centralized exchanges, they are usually launched in Uniswap, as they do not require approval by central entities.
For example, when Yearn.finance (YFI) was first launched, it was trading on decentralized exchanges such as Uniswap. Later, Poloniex, FTX, and finally Binance included the token in their list.
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Many small and mid-cap DeFi related tokens are actively traded on Uniswap, especially those not included in the major exchanges.
The abundance of DeFi tokens at Uniswap, complemented by the rapid expansion of the DeFi market, has catalyzed Uniswap’s exponential growth. Hayden Adams, the creator of Uniswap, wrote
„Wow, Uniswap’s 24-hour trading volume is greater than Coinbase’s for the first time in history. Uniswap: $426M Coinbase: $348M It’s hard to express how crazy this is.
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The growing activity of Uniswap users also coincides with a notable increase in the volume of daily transactions of Ethereum.
Etherscan, Ethereum’s blockchain scanner, shows that the number of Ethereum transactions has increased from $435,000 in January to over $1.1 million in August.
Daily transaction activity in the Ethereum blockchain is approaching 2018 levels for the first time in two years. At that time, ETH surpassed $1,400 in Coinbase, its highest price ever.
Will the DeFi craze continue?
The growth rate of the DeFi market has increased to a point where it could be more lucrative to „harvest“ DeFi coins than to mine them. As Clearmatics‘ head of markets Tim Swanson said:
„There are over 150,000 txns in the Mempool Crypto Cash and even a ’slow‘ tx rate is around USD 10. That may sound like a lot of $$$ for miners (it’s relative to other time periods) but the RoI of capital in harvesting DeFi coins is probably higher, even with impermanent losses.
The strong momentum in the DeFi market and the volume in Uniswap indicate that the upward trend in the DeFi market shows no signs of slowing down.