The world’s most prominent DEX exchange, Uniswap, finally ended UNI farming on its exchange on November 17.
The close of its UNI farms also, furthermore, unlocked over $1 billion worth of liquidity from Uniswap. With no clear direction following the end of farming, the exchange is struggling to stay relevant.
Over $1 billion in $ETH is being freed up from @UniswapProtocol’s farming protocols tomorrow. 🤯
— FomoHunt (@FomoHunt) November 16, 2020
UNI’s First Community Call
Before ending its UNI farming, the exchange called for its first-ever community call. The meeting was directed at finding out the next steps to take following the end of farming on the platform. Unfortunately, the community call ended with no clear decision made. No proposals were submitted either to extend its UNI farming or to create new pools.
Hosted by team member “Monet Supply,” the community call started with a summary of recent activities on Uniswap. Crypto podcaster Matt Aaron asked for suggestions as regards the end of UNI farming on the exchange. In his words, it was crucial to forestalling the occurrence of another “vampire attack.” A major pointer to this was the unexpected move by SushiSwap in September.
According to Aaron, convincing investors to remain on the exchange even after incentives have ended was the most important step.
Since its launch in September, Uniswap has been operating four different liquidity pools. Each pool has been amassing 583,333 UNI every week, amounting to more than $2.4 billion. This earning alone has propelled the DEX, earning it the number one position on the DeFi list.
Before the end of UNI farming, there was a palpable fear of UNI holders selling off. However, this move, in the long term, may favor UNI prices. Another major area of concern was the over $1 billion worth of ETH that was subsequently released by the platform.
Uniswap Loses Dominance
Following the end of UNI farming, Uniswap has recorded a sharp decline in liquidity. The DEX platform liquidity fell from $3.3 billion to a shocking $1.7 billion. Interestingly, SushiSwap (major Uniswap competitor) began giving out incentives to the same pools on the same day UNI farming ended.
Sushiswap just started incentivizing the exact same pools as Uniswap on the day Uniswap's subsidy ends 🍿 https://t.co/rpcrwIdtHw
— Hasu (@hasufl) November 16, 2020
Independent researcher Hasu termed this a microcosm of a “vampire attack.” According to him, the only difference is that SushiSwap has more unique products this time around.
This feels like (a smaller) vampire attack 2.0, with the difference that Sushiswap has a more distinguished product now and is not just an exact clone of Uniswap anymore.
— Hasu (@hasufl) November 16, 2020
This move has increased the DEX platform’s liquidity with SushiSwap once again rising about $1 billion in terms of Total Value Locked (TVL) on the platform. The rise in TVL of SushiSwap has propelled it to become the sixth largest DeFi protocol. Furthermore, Uniswap has lost its dominance and is now the fourth largest DeFi project. Maker has taken over from Uniswap and is currently in the position of the largest DeFi project today.
To remedy the effect of UNI farming, community members have put forward a proposal to continue farming.
Alpha leak: There is now a governance proposal to *continue* $UNI @UniswapProtocol liquidity farming that would begin on December 4th if approved.https://t.co/xCLRpoondA
— Autism Capital 🧩 (@AutismCapital) November 16, 2020
According to the proposal, the farming of Uniswap’s four main asset pairs WBTC/ETH, USDC/ETH, USDT/ETH, and DAI/ETH will continue. Farming is expected to commence on December 4. So far, the proposal is generating a lot of discussion by community members.
At the time of writing, UNI token was down by 5.2% and was trading at $3.34. The token also had a market cap of $718,662,222 and a 24-hour trading volume of $293,116,178.
Find out more about Uniswap on the Altcoin Buzz YouTube channel.