Journalist
Posted:
- DeFi DEX volumes plummeted, with September 2023 on track for the lowest monthly volume since early 2021.
- Uniswap, one of the largest DEXs in the sector, also saw a decline in activity.
Recently, the DeFi (Decentralized Finance) sector has been subject to intense market pressure due to the broader bear market.
Realistic or not, here is UNI’s market cap in BTC terms
Within the DeFi space, several segments, including decentralized exchanges (DEXs), have experienced significant challenges, most notably shrinking trading volumes.
Volumes are starting to drop
Data showed that monthly trading volumes on DEXs were about to hit their lowest level since early 2021 in September 2023. This ominous trend raises legitimate concerns about its potential impact on prominent DEX platforms, especially Uniswap. [UNI].
Monthly DEX volume in September 2023 on track to be the lowest volume month since early 2021. Onchain summer cooling directly into winter pic.twitter.com/TcAGV5Yx3i
— Sisyphus (@0xSisyphus) September 20, 2023
Uniswap, a heavyweight in the DEX sector, has not escaped the consequences of this downturn. According to statistics sourced from Token Terminal, Uniswap experienced a significant drop of 21.3% in its daily active user base over the past month.
Naturally, this reduction in user engagement correlated with a reduction in costs generated by the Uniswap protocol.
Steps to hinder MEV attacks
These challenges have been exacerbated by recurring instances of Miner Extractable Value (MEV) transactions and sandwich attacks targeting the Uniswap network.
MEV trades and sandwich attacks represent forms of front-running and market manipulation techniques that can exploit vulnerabilities within automated market makers such as Uniswap.
To counter the negative impact of MEV-related activities, Uniswap has introduced strategic measures, of which UniswapX is a prominent example. UniswapX is designed to capture MEV and redistribute it to traders via enhanced pricing.
This approach protects traders’ interests by ensuring that the benefits they receive are not siphoned off by arbitrageurs.
Additionally, UniswapX encourages users to use private transaction relays when routing orders to on-chain liquidity locations. This cautious strategy hinders specific forms of MEV extraction and contributes to a safer and fairer trading environment on the Uniswap platform.
1/ Front running and sandwich attacks lead to thousands of dollars in losses for daily swappers 🫢
With UniswapX, the captured MEV is instead returned to swappers via improved pricing ✨ pic.twitter.com/goEBC69FvC
— Uniswap Labs 🦄 (@Uniswap) September 12, 2023
Is your portfolio green? View the UNI Profit Calculator
Shining the spotlight on Uniswap’s native cryptocurrency, UNI, it too faced a unique set of challenges. At the time of publication, UNI was trading at $4.26, a substantial price drop from the previous month.
In addition to this price drop, trading volume also experienced a noticeable decline.
Source: Santiment
