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Uniswap DEX Continues to Be Industry Leader Following $165M Raise

2 mins
Updated by Ryan James
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In Brief

  • Uniswap Labs has raised $165 million to help boost profitability and expand product line.
  • According to CEO Hayden Adams, funds will also be used to improve accessibility of DeFi products.
  • DEXs currently trump CEXs with lower transaction fees, but require large amounts of technical skills to operate.
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Uniswap Labs raises $165 million in a Series B funding round led by Polychain Capital and earlier investors Paradigm and a16z. 

The company is the corporate entity behind the decentralized exchange Uniswap. This protocol automates markets created by so-called liquidity providers who deposit tokens into smart contracts to earn money.

Uniswap fundraiser validates decentralization thesis

For Uniswap founder Haydn Adams, the fundraiser validates decentralized protocols that have come through the crypto winter largely unscathed.

“For us, the industry has started to prove itself and we’re seeing the value of it, especially in this bear market when a lot of centralized infrastructures failed, and a lot of decentralized entities prevailed,” Adams told Fortune.

Uniswap is a decentralized protocol living on the Ethereum blockchain that has processed $1.2 trillion in transaction volume since its inception in 2018. According to DeFiLlama, Uniswap has over $4 billion in total locked value, while its native UNI token has a reported market capitalization of around $4.53 billion. At press time, UNI’s reported 24-hour trading volume was $60.47 million, according to crypto market intelligence provider Messari.

Uniswap Labs will use the newfound cash to widen its product portfolio and become profitable. It will also create an aggregator for non-fungible tokens (NFTs). NFT Aggregators are simplified dashboards used to compare NFT prices. They can allow potential buyers to buy NFTs from multiple marketplaces in one transaction, saving buyers high gas costs. Uniswap acquired NFT aggregator Genie in June 2022.

Additionally, Adams said, the corporate entity will be building tools to make Web3 and decentralized finance more accessible to the general public than it currently is and hopes to unify the seemingly disparate NFT and token worlds. 

Users win if DEXs like Uniswap clean up usability issues

Decentralized exchanges like Uniswap have emerged as popular alternatives to institutions like Coinbase, Binance, and Kraken since they offer lower transaction fees and allow users to maintain custody of their so-called keys in a self-custodial wallet instead of ceding control to an institution.

A key selling point of DEXs is that they do away with intermediary liquidity providers typically used by centralized exchanges, reducing the cost of trading for users. By decentralizing liquidity provision, DEXs also avoid the risk of providers withdrawing liquidity and limiting trading.

The other way DEXs have potential is by simplifying the access and use of crypto wallets. Wallets hold unique strings of letters and numbers called keys. Users sign transactions with these keys proving that they own coins or tokens stored on the blockchain. On a centralized exchange, the company holds those keys on behalf of its users, while on a decentralized exchange, the user has complete control over their keys. 

However, DEXs and self-custodial wallets have, for the most part, been the playground of the technically savvy unless companies like Uniswap and Adams can abstract away the underlying mechanics to make the technology more accessible.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...