Uniswap is a great Web3 reality, but seems to be in trouble. Despite significant blockchain development and funding, DEX seems to no longer attract users and to have fallen victim to ‘crypto winter‘ for too long.
Between metaverse, NFT and cryptocurrencies, there are many disappointments. Several months have now passed and since the beginning of 2022 and we have to admit that the Web3 has suffered a lot. We cannot know for sure when the market will resume its upward race. But we must admit that there is still positivity about the sector.
Unfortunately, however, there are very large companies involved in the crypto world that seem to be losing many supporters. One example? Uniswap. The DEX platform is a stronghold among international exchanges. Despite its latest USD 165 million round, does not seem to be recovering, continuing to lose users.
The same goes for the development of zkSync. It is not enough to push crypto $UNI towards its 2021 highs and the platform back to its former glory.
What is Uniswap?
It is a cryptocurrency exchange, but different from the better known ones like Kraken or Coinbase. Uniswap is in fact a ‘DEX’, i.e. a decentralised exchange of ERC 20 tokens (smart contracts with a predetermined structure) capable of supporting the exchange between different cryptos created with the same system and based on Ethereum.
It is a direct competitor of other already known realities such as Pancakeswap. But in this case it is a non-profit platform. In fact, the commissions are very low and represent small returns for those who make their liquidity available within the network.
Uniswap’s governance is based on the native crypto $UNI. Which, unfortunately has lost a lot over the past year, now looking far off the highs of 2021.
Just think that in April last year, in fact, the token of the decentralised exchange was worth around $45. And now? Only $6.62, despite the fact that the last month has seen a significant rise of 15.66%.
New funding round for DEX
In this highly disappointing environment for the entire digital sector, in which many companies are forced to lay off employees and numerous cryptocurrencies are born and die within days, Uniswap has brought home some success just recently.
It seems that according to CEO Hayden Adams, the latest fundraising round (Series B round) went really well in spite of a less than exciting period. Indeed, it seems that, led by Polychain Capital, Uniswap raised around USD 165 million!
An interesting figure that grants more confidence to the project.
This will ensure better development of the technologies that recently kept holders of the $UNI token busy in a vote that saw the proposal previously put forward by one of the network’s developers, Matt Labs, confirmed.
zkSync technology: how does it work?
When decentralised protocols have to make important decisions, they rely on the DAO. I.e. the network’s community, which is the native crypto holder that grants voting rights on internal issues that are raised by developers.
The case in question concerned zkSync, an Ethereum second layer also exploited by Uniswap and successfully republished precisely because of its extremely low gas fees.
The vote went in favour of the continuation of zkSync. This, with 72.4 million votes in favour and only 120 against: another success for the exchange!
This synergy, which increasingly underlines the focus on commissions among the lowest in the market, together with the USD 165m raised, puts DEX back on the road to recovery. Or perhaps not quite.
Declining users for decentralised exchange
Sad news also has to come, although the previous ones were able to inspire confidence.
Actually, according to data from the website Messari.io we can say that Uniswap is no longer among the top crypto companies in terms of revenue and number of users. On the first point in particular, the exchange was recently overtaken by Opensea.
Although it ranks fourth in terms of the volume of transactions generated among DEX, it has been losing users of $UNI tokens for some time. This, leaving creator Adams bitterly disappointed as he is forced to watch active addresses on the platform dwindle, even though it is registering high volumes.
Decentralised exchange? A risky investment
The reasons for the lower number of users are due to the general picture the world is in.
Galloping inflation globally, conflicts between Russia and Ukraine, together with the energy and climate crisis, make states very restless and risk-averse.
At the moment the price of $UNI tends to lateralise. It is hard to imagine users rising at a time when cryptocurrencies have been losing value for months.
Unfortunately, even if one anticipates a possible rise in cryptocurrency in the long run, it is unthinkable that users will increase at such an uncertain time.
Decentralised exchanges are notoriously less secure than ordinary ones such as Binance. And the amount of risky assets they offer can make users look for other solutions.
What to do? Definitely don’t expect a recovery in the short term for Uniswap. But keep an eye on how Hayden Adams and his team will exploit the new funding.