The third iteration of the Uniswap DEX beast is inching closer to match the weekly trade volume of its previous iteration (Uniswap v2) head-to-head. According to a recent post by Messari Crypto, a cryptocurrency data analytics and intelligence firm, Uniswap v3 weekly trade volume has surged past $6.5 billion, signalling a possible record-breaking of Uniswap v2 by the end of the month.
Uniswap v3’s towering DEX volume pushes it close to v2 by 81%. This is all happening without liquidity incentives, v2 iteration came with liquidity mining of UNI that exploded the DEX trade volume back then in September or passive LP managers.
Expectedly, Uniswap v3 is now the second-largest DEX by weekly trade volume trailing v2 in the first place, while its competitor, Sushiswap, comes in third place with $5.6 billion. 0x, Curve, Balancer and Bancor follow Sushiswap as 4th, 5th, 6th and 7th largest Ethereum based DEXs, respectively.
On aggregate, per DEX market share, Uniswap v2 & v3 effectively gives the DEX beast a 61% overall DEX market share,- an impressive feat even while competitors like Sushiswap had staged a vampire mining attack in the past and other challenger L1 chains like BSC, Solana and Avalanche are looking to keep aping away market share from Ethereum based projects with their higher throughput feature and cheaper transaction fees.
Founder Hayden Adams and team released Uniswap v3 on May 5th with exciting features like concentrated liquidity, capital efficiency, active liquidity, range orders, non-fungible liquidity, flexible fees. It even went further to add a license to use its open-source code to secure it from the constant forking, somewhat like we saw many DEXs do with its v2 iteration.
On further thought, it’s not so surprising why Uniswap v3 has seen insane transaction activities just weeks after launch after about eight months of the UNI token launch. Features like concentrated liquidity significantly increase market depth for the DEX users. Uniswap v2 users weren’t immune to slippage, the major challenge of using DEXs. V3 reduces slippage for regular users, effectively giving them a better trading experience. Traders can trade across these various concentrated liquidity positions simultaneously without incurring additional gas costs.
And like a domino effect, concentrated liquidity improvement leads to capital efficiency for Uniswap v3 DEX users. Capital Efficiency increases rewards for LPs by up to 4000x. This gain has the potential of increasing further up to 20,000x as soon Hayden and the team complete the implementation of Layer2. Uniswap is working to scale its DEX by implementing Optimism which is still in the development phase.
Although challenger DEXs like Sushiswap recently launched v1 of its margin trading platform while Pancakeswap, BSC’s largest DEX is expecting to roll out its v3 soon, many are favourably tipping Uniswap to widen its lead.
As of press time, UNI token is trading around $26.44 per token, having fallen by more than 30% in price value in one week reacting similarly with other altcoins in the recent market crash.