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24 November 2020

UniSwap fights back as competitors drain value from the DEX

UniSwap fights back as competitors drain value from the DEX


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That being said, it appears as though liquidity incentives on the Uniswap decentralized exchange have dried up, with the platform recently offloading 40% of its liquidity within a period of just 48 hours before the conclusion of its UNI liquidity rewards program on Nov.

Regarding the situation, Carlsbad Sunshine, CEO at LID Protocol, a platform providing solutions for depositing liquidity into Uniswap, told Cointelegraph that all DeFi projects follow a hype cycle with ups and downs.

Providing his views on this latest liquidity crisis, Kyn Chaturvedi, chief business development officer at TomoChain, a scalable blockchain platform that also runs TomoDEX, told Cointelegraph that when it comes to liquidity-based incentives, the customers will flock to where the rewards are.

Nischal Shetty, CEO of India-based crypto exchange WazirX, believes that the primary intention behind liquidity farming from the very start was to simply attract users, giving them an opportunity to try out DEXs and understand how to use them: “So despite the initial drop in liquidity when the mining rewards stop, I don’t think there will really be a decline in usage because the people who want to buy/sell crypto via a DEX, and have discovered the DEX, will stay back.”.

Also, it should be pointed out that ever since governance on UniSwap went fully decentralized back in mid-September, the platform has failed to pass a single governance proposal.

That being said, Sunshine believes that in the future, DEXs will supersede the growth of CEXs

For example, he pointed out that Uniswap V3, Ethereum 2.0 and UNI governance are right around the corner, a development that will most likely continue to fuel the rise of DeFi:

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