Liquidity on the world’s most popular decentralized exchange, Uniswap, has skyrocketed despite a massive surge in gas prices.
It seems that cryptocurrency traders can’t get enough of token swapping as decentralized exchange popularity continues to grow and eat the market share of their centralized cousins.
Uniswap suffered a major liquidity decline when yield farming incentives ended in mid-November 2020. A governance vote was carried out and the decision was not to extend them, resulting in an exodus from the DEX.
Fast forward six weeks and that liquidity has returned despite the lack of yield farming pools on the platform.
Uniswap Liquidity Tops $3 Billion
Uniswap founder Hayden Adams noted the achievement stating that liquidity had surpassed $3 billion and was approaching its all-time high. According to the exchange’s own analytics, that number was $3.36 billion on Nov. 13.
The liquidity spike began on Jan. 2 and a billion dollars was added over the next five days according to those charts. The top pair on the DEX is wBTC/ETH generating $43 million in volume and $129,000 in trading fees over the past 24 hours.
Without any token farming incentives, liquidity providers only get a share of the 0.3% trading fee for their respective pools. 24-hour trading volumes are currently around $750 million according to Uniswap. Better yields can be found elsewhere, but Uniswap still appears to be the preferred choice for token swaps.
DeFi Pulse reports slightly different figures with a total value locked of $2.65 billion, but the trend and chart pattern is similar. It also reports that the TVL figure has increased by 7.6% over the past 24 hours but the amount of ETH locked continues to decline.
The surge in DeFi activity, and Ethereum’s pumping prices, has added to the gas crisis as average transaction fees hit a record high of $16 on Jan. 4 according to BitInfoCharts. Fee costs have retreated a bit since and the analytics website is currently reporting the average fee at around $9, which is still very painful for anyone not shifting large quantities.
UNI Price Update
Uniswap’s native UNI token has been flying recently, along with the rest of the cryptocurrency market. UNI prices are flat on the day at $6.24 according to Coingecko but have made an impressive 50% over the past seven days.
Prices for the DEX governance token are now not far off its all-time high of just over $7 which came in mid-September when its token farming incentives were launched.