Journalist
Posted:
- The protocol’s decision to introduce swap fees culminated in an increase in revenues.
- The TVL also increased, indicating increasing participant confidence in Uniswap.
Front-end costs generated by the Uniswap [UNI] protocol have reached $1 million, according to data obtained from Dune Analytics. In October, there was some controversy over Uniswap’s introduction of front-end fees.
As before reported by AMBCrypto, the Decentralized Exchange (DEX) noted that Uniswap would charge an exchange rate of $0.15%. This fee is a swap fee for transactions between certain tokens.
While the development didn’t exactly go down well with the community, the $1 million milestone means users are already adapting to the change.
Resolves the initial refutation
The fees generated relate to the front-end part contributed up to 17.4% of the total fees Uniswap generated in the last 24 days. AMBCrypto’s research found that Uniswap’s decision not to bow to pressure to reverse the decision was driven by the exchange’s importance to traders.
Source: Dune Analytics
An example of this importance is the trading of tokens built on the Ethereum [ETH] blockchain. For a long time, traders have chosen Uniswap as their preferred option for buying and selling tokens that are not available on Centralized Exchanges (CEXs).
So it was clear that users had no choice but to adapt to the new update. As fees generated rose, Uniswap rose gain also followed. According to Token Terminal, Uniswap Labs’ revenue has increased 69.8% over the past seven days.
Source: Token terminal
Declining liquidity amid rising TVL
But at the time of writing, the value had fallen by 43%. Uniswap mainly generates its revenue from transaction fees. It also collects a part of the fees earned by Liquidity Providers (LPs).
LPs are entities that provide buy and sell orders to a DEX to increase market liquidity. These groups of market players do this by depositing crypto assets into a pool so that other traders on the platform can execute swaps.
Therefore, the decrease over 24 hours implies that there has been a decrease in Uniswap usage. In terms of the Total Value Locked (TVL), DeFiLlama data showed that it is up 6.83% over the past seven days.
The TVL measures the total amount of assets deposited in a protocol. Typically, these deposits are allocated in an attempt to earn rewards or returns. The more, the higher the perceived trust a protocol has.
Realistic or not, here it is UNI’s market cap in terms of ETH
When the TVL decreases, it means that users are refraining from increasing the liquidity of the protocol.
Source: DeFiLlama
Therefore, Uniswap’s press time TVL indicated that market participants have trusted the protocol enough to increase its usability and the money sent into it. Should trading activity increase, it is likely that TVL will soon exceed $3.64 billion.
