Uniswap: Caping DeFi Over Centralized Entities

Uniswap caping defi over centralized entities
Sep10

An Ethereum based exchange constantly rising over the top on the DeFi - Decentralized Finance chart, Uniswap exchange is a decentralized exchange. It is hosted on ethereum Blockchain as well as a public open-source front end client in the form of two smart contracts. Assisting to swap ERC20 tokens, and an ETH to an ERC20, and vice-versa, Uniswap is a 100% on-chain market maker. 

As the impulsive growth of the Decentralized Finance market pushes numerous investors towards Decentralized Exchange, investors interest in uniswap hikes up. This is because of the launch of DeFi related tokens that typically takes place on Uniswap first as it does not require approval from the centralized entities. 

A Big Deal → 
Allowing investors to contribute in liquidity pools for any ERC20 token and gain commissions, Uniswap sounds a big deal as it assists exchange without a middleman. 

100% on-chain, also known as “The Factory Smart” contract, Uniswap liquidity provider consists of an exchange registry and a method to deploy an exchange contract for any valid ERC20 token. 

Reason behind rapidly increasing popularity of Uniswap? → 
One of the major reasons lying behind the popularity of Uniswap is the Listing of DeFi tokens, especially the governance tokens, being launched on without requiring any approvals like that of centralized ones. 

Uniswap acts as a trading center for various small to mid-cap DeFi tokens especially the ones not listed on major exchanges. 

The tremendous expansion of the DeFi market has raised the number of Defi tokens on uniswap and has therefore substantially sped up its growth. Hayden Adams, the creator of Uniswap Quotes:

“Wow, Uniswap 24hr trading volume is higher than Coinbase for the first time ever.
Uniswap: $426M Bank Coinbase: $348M. Hard to express with how crazy this is.”

The rapidly increasing user activity on Uniswap is noticeably proportional to the daily Ethereum transaction volume.The surging user activity on Uniswap also coincides with a noticeable increase in the daily Ethereum transaction volume.

The Ethereum blockchain explorer Etherscan reflected an increase in the number of Ethereum transactions from around 435,000 in January to over 1.1 million in August.

For the first time in the last two years, the Ethereum blockchain neared the 2018 levels in August 2020. At the time, ETH crossed over $1,400 on Coinbase, it's all-time high price.

Can DeFi sustain its future position?

DeFi market’s growth momentum has increased to an extent where DeFi coins would be more profitable to “harvest” than to mine. The given momentum of the DeFi market and the volume on Uniswap reflects the upward trend of the DeFi market without a sign of slowing down.


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