Uniswap remains the biggest decentralized exchange in the world. Although many competing solutions exist, few projects can maintain high trading volume. The DEX apparently overcame the 2022 slumps as its weekly volume surpassed $7 billion.
Last year was very rough for the cryptocurrency industry. All major companies and service providers noted a liquidity crunch. For decentralized exchanges like Uniswap, that means noting far lower trading volumes.
The data by Kaiko confirms the project struggled a lot throughout 2022. That coincides with the overall price slump all cryptocurrencies experienced.
When prices for Ethereum and ERC-20 tokens drift lower, they become less appealing to traders and speculators. That said, a lower price makes it easier to pocket a decent profit later on.
Lower prices should entice more people to build their crypto portfolio, but that isn’t always the case. Moreover, it reduces people’s demand to explore swapping between different Ethereum-based assets.
As a result, Uniswap’s weekly volume – V2 and V3 combined – trended lower throughout 2022. There were some peaks in April and June, although the overall trend was rather bleak.
Going from over $20 billion in weekly volume to barely over $10 billion in six months is never a good sign. Moreover, that decline continued as the year progressed.
Interestingly, the FTX collapse triggers a rebound in Uniswap weekly volume. Trades suddenly spoked to nearly $20 billion for a week before dropping to $7-ish billion again.
Post-collapse, Uniswap’s trading volume resumed the downtrend, dipping to $2.4 billion in late December. That is still a decent volume for a DEX, but its a level not seen since late 2020.
Thankfully, it appears 2023 will be a much better year. All crypto markets increased in value in January, yielding more demand for alternative Ethereum assets. As a result, Uniswap has hit high weekly volumes again, surpassing $7.2 billion for the first time in a while.
A higher volume benefits all users and liquidity providers. More trades mean more revenue from trading fees, making everyone happy.
Speaking of liquidity, Ethereum (ETH) remains the top asset on Uniswap, ahead of USD Coin (USDC), DAI (DAI), and Wrapped Bitcoin (WBTC). Tether clings on to the fifth spot, although its volume is almost a quarter of USD Coin. USDT has lost momentum on Ethereum lately, and its overall TVL on Uniswap has dropped to $164 million.
For those trying to provide liquidity to collect trading fees, using USDC pools is the way to go. More specifically, USDC/ETH (0.05%), USDC/USDT, and USDC/ETH (0.01%) have the highest weekly volume. For example, the 0.05% fee USDC/ETH pool noted $2.83 billion in weekly trades, whereas none of the others surpassed $1 billion.
Overall, it appears the momentum has turned around for Uniswap. That is a good sign for the overall DEX industry, although things can still turn around. Given the recent bearish trend, the overall volumes may decrease again over the coming days and weeks.
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