The race between Uniswap DEXs

The race between Uniswap DEXs


As one of the most eagerly anticipated rollouts of the decentralized finance (DeFi) sector, Uniswap v3 went live on May 5. The upgrade targeted greater capital efficiency and better flexibility for liquidity providers. 

The concept of Uniswap v3 includes features such as concentrated liquidity — which allows liquidity providers (LPs) to allocate their capital in certain price ranges rather than distribute liquidity across the entire price curve — as well as multiple fee tier systems which help LPs to adjust to varying degrees of risk.

The launch of Uniswap v3 sparked discussions across the crypto community: While some people expected the new version of the largest decentralized exchange (DEX) to be a game-changer in the DeFi sector, others expressed skepticism over whether the “greater capital efficiency” policy would cater to a wider user base, or if would attract more affluent market makers only.

The numbers behind Uniswap

After Uniswap v3 surpassed v2 by trading volume in late May, it has kept its leadership position ever since. The trading volume on v3, however, has been fractionally higher than that of v2 for the past five weeks. There are no clear signs of an uptrend for Uniswap v3, though. The protocol saw wide fluctuations in swap volume in June, but its peak was lower than in May.

Circling back to the average size on Uniswap v3 compared with the v2, data suggests that the average swap size on Uniswap v3 is 4.4 times larger than that of v2. Users are swapping less often with larger amounts, which could prove the skeptics of Uniswap v3 were right, as the user base tends to be wealthier.