- With over 900,000 users, Uniswap recorded its highest monthly increase since the beginning of the year.
- Avalanche and StarkNet followed, but Uniswap’s liquidity declined.
May has turned out to be a remarkable month for the Uniswap [UNI] protocol, as monthly users grew from about 800,000 at the start to 969,466 at the time of writing. The data, obtained from Token Terminal, revealed that this was the highest growth Ethereum [ETH]-based Decentralized Exchange (DEX) has seen all year.
Realistic or not, here it is UNI’s market cap in terms of AVAX
Increasing participation and competition
For most of the first quarter (Q1), the project struggled to add more than 100,000 users. In April, user growth was almost negligible.
Source: Token Terminal
Due to the increase in the number of users, there was an impressive number of different addresses transacting over the Uniswap network within the mentioned period. Additionally, Uniswap’s decentralized nature, support for ERC-20 tokens, and extensive token launches may have contributed to this surge.
Around the same May, Uniswap allowed traders access several memes developed under the Ethereum blockchain. This increased participation in the DEX.
Despite witnessing a significant spike in statistics, the emergence of competing Layer Two (L2) networks such as StarkNet has kept Uniswap sharp. In the last 30 days, the number of users of the permissionless decentralized Zero Knowledge (ZK) package has increased by 84.7%.
However, the number of users only peaked at 764,320. For Layer One (L1) project Avalanche [AVAX]it was able to grow by 35.8%, surpassing StarkNet’s numbers.
On its own, Avalanche has presented itself as one immersive alternative because it can connect to side chains. The project’s ability to connect to L2 subnets may also have affected the increase.
On the counter
Despite the increase in user numbers, the protocol’s liquidity was on a downward trend for most of the month. According to Glassnode, Uniswap’s liquidity had dropped to $5.40 million at the time of writing.
Source: Glassnode
How many Worth 1,10,100 UNIs today?
Liquidity in crypto refers to the ease with which tokens can be exchanged for other tokens through order books. High liquidity means that trading volume has increased and it is easier to execute orders despite the many market participants.
But when liquidity is low, as with Uniswap, it means it was difficult to buy and sell tokens on the DEX. As the month of May draws to a close, the focus could be back on Uniswap. Will the protocol add to the growing user base, or will the latter part of the quarter prove better? Time will tell.
