• Uniswap’s growth v1 – v3
• Automated Liquidity Provision on Ethereum (gas fee)
• DEXs volume vs. CEXs
• CEXs and TradFi

Uniswap’s L2 alpha has come too far. Nevertheless, Uniswap’s growth (v1 – v3) is worth looking back in terms of how it stacks relative to CEXs and TradFi.

CEX refers to centralized exchanges.  TradFi means standard retail, commercial, and investment banks, along with FinTechs and tech companies that operate in finance. DeFi is not tradeFi.

Uniswap is a protocol for trading and automated liquidity provision on Ethereum. It guarantees liquidity for millions of users and hundreds of Ethereum applications. Recently, Uniswap v3 has been deployed to the Ethereum mainnet. To use Uniswap, the first step is to start with an Ethereum Wallet and some ETH.

Each transaction on Ethereum costs ETH (this is called the “gas fee,” and it’s paid to miners to keep the network running).

Lucas OutoMuro draws the attention of Uniswap users by facilitating some impressive numbers:

LP all-time revenue: $920m+ makes it evident that Uniswap is poised to become the first protocol to surpass $1b in fees generated.  Reportedly, high revenues are driven by its massive volumes, even after a 70% drop from its highs on the week of May 19.  Uniswap volumes have grown 40x year over year and 920x in comparison to January 2020.

Aggregate TVL across versions managed to reach $10b at its highest, especially impressive considering there were no liquidity mining incentives at the time.  Despite still having half the liquidity of v2, v3 is trading 2.7x more volume, of course, is enabled by v3’s improved capital efficiency Average numbers for daily volume/liquidity.

Uniswap v3 has also benefited from the success of its low 0.05% fee trading pairs. For example, on July 15, the USDC/ETH 0.05% pool traded $273m, approximately the same volume as in the next four pools *combined * These pools are likely to play a key role as Uniswap steps up vs. TradFi.

Uniswap is currently trading at a discount relative to its traditional counterparts in terms of P/S. Although not apples to apples, Uniswap’s 7.81 P/S seems low considering it grew revenues 40x year over year.

Uniswap is efficient: with its capital and the amount of revenues it can generate per employee ($32m / employee).  DEXs volume share vs. CEXs has increased from 0.32% to 10% within two years Uniswap makes approximately ⅔ out of DEX volume

As costs drop ~20x on L2, Uniswap’s share of total trading volume is likely to increase. Ultimately this should soon make Uniswap the first protocol to reach $1b in fees generated and aim much higher.