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Uniswap plunges by 23% within a week, while SushiSwap gains visibility

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  • Dune Analytics has proposed a vendor-neutral, community-centric analytics program on Uniswap.
  • Uniswap’s current governance contract has upgraded from Governor Alpha to Bravo, improving upgradability and protocol safety.
  • With the ongoing SEC investigation on Uniswap Labs, the token’s price has dropped nearly 23% within a week.

Layer-2 solution Arbitrum One recently launched on mainnet, and Uniswap and SushiSwap were listed as the first two decentralized applications joining the protocol. The competition between the two has further intensified with Sushiswap’s ecosystem development in recent months. 

SushiSwap competes with Uniswap for dominance

SushiSwap, a decentralized exchange (DEX) and automated market maker (AMM), was launched with additional functionality compared to Uniswap and incentivized Uniswap users to migrate to its platform. 

Since its inception, the two DEXes have competed for dominance. At the time of writing, Total Value Locked (TVL) or (total value of assets staked on Uniswap) is $6.58 billion, while for SushiSwap it is $4.19 Billion. 

It may be premature to expect SushiSwap to beat Uniswap in market dominance and staked assets. However, with the latest upgrades in its ecosystem, SushiSwap is prepared to capture higher TVL. 

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SushiSwap may have started as a clone of Uniswap. However, new token issuances are decreasing every month, and users can capture newly issued SUSHI through incentives on liquidity pools. Users are incentivized to stake on SushiSwap’s liquidity pools, which is likely to drive volume from Uniswap to SushiSwap. 

Further, Uniswap Labs, the developer of UNI, is currently subject to the ongoing investigation by the Securities & Exchange Commission (SEC). 

The news of the investigation has negatively impacted trader sentiment, and UNI’s price has dropped 23% over the past week. 

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The SEC’s litigation of Ripple Labs, the largest public holder of Ripple, led to a massive plunge in trader sentiment and the price of the altcoin, and proponents expect the investigation to have a similar impact in the case of Uniswap DEX’s native token UNI. 

This poses an opportunity for SushiSwap to replace Uniswap as a DEX with a larger TVL. 

Uniswap V3’s launch on Optimistic Ethereum mainnet enabled nearly ten times the savings in transaction costs. This launch and upgrades in Uniswap V3 have triggered a neck-and-neck competition between the two DEXes. 

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Uniswap was severely criticized for a proposal to grant $25 million to Flipside Crypto, a community-enabled crypto analytics platform. Dune Analytics, an Ethereum ecosystem analytics platform, emerged as a staunch opponent of the grant proposal. 

The platform has now proposed a vendor-neutral analytics program on Uniswap. 

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Further updates on Uniswap governance include an upgrade from Governor Alpha to Bravo, which boosts platform security and upgradability. 

Uniswap has fewer technical upgrades to look forward to in the short term; however, the 24-hour trade volume has hit $33.3 million (Arbitrum and Optimism combined), four times the previous all-time high. 

Uniswap is leading among decentralized exchanges, and it remains to be seen whether SushiSwap will dethrone the former. 

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Uniswap

Uniswap price eyes 20% upswing if UNI can clear this crucial barrier

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  • Uniswap price is on a journey to retest $25 after the recent downswing.
  • On-chain metrics hint at smooth sailing ride apart from the massive resistance at $20.84.
  • A daily close below $17.75 will invalidate the bullish thesis.

Uniswap price reverses its downtrend and is on its way to set up higher highs. The bullishness around UNI comes as investors are expecting t UNI price to see a quick run-up as the crypto market also sees a minor upswing.

Uniswap price to continue its ascent

Uniswap price has rallied roughly 11% over the past 24 hours after it sliced through the $18.73 swing low. This upswing is likely to fill the Fair Value Gap (FVG) that extends up to $21.13 and make a run at the $22.36 resistance level.

The buy stop liquidity resting above these highs will be the market makers’ first target. Beyond this area is another FVG, extending from $22.49 to $24.51. So, investors can expect UNI to breeze through this area with ease. Resting above the $24.78 is another set of buy stops that the market makers will target.

This run-up will constitute a 20% surge in Uniswap price. 

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UNI/USDT 4-hour chart

UNI/USDT 4-hour chart

The technicals are pointing at a bullish outlook for Uniswap price, and on-chain metrics also hint at a similar outlook. Take, for example, the 30-day Market Value to Realized Value (MVRV) model.

This on-chain metric is used to determine the average profit/loss of investors that purchased UNI over the past month. Since this indicator is hovering around -5%, it indicates that investors are at a loss. This area is where market participants accumulate the assets, suggesting it is an excellent place to see UNI price grow.

UNI 365-day MVRV chart

UNI 365-day MVRV chart

While things are looking up for Uniswap price, there is one hindrance that bulls will face in its upward journey. IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model shows a massive cluster of underwater investors at $20.84. Here, roughly 6,680 addresses purchased nearly 183 million of UNI.

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These “Out of the Money” investors are likely to pose a threat to the upswing as they could sell their holdings to breakeven. Therefore, clearing this level will remove the sell-side pressure and trigger an upswing for Uniswap price.

UNI IOMAP chart

UNI IOMAP chart

A rejection at $20.84 that results in Uniswap price correcting to $18.73 will be questionable and indicate that sellers are running amok. In such a situation, if UNI produces a daily close below $17.76, it will create a lower low and invalidate the bullish thesis.

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Votes are in: over 7 million Uniswap holders in favor of Polygon’s deployment proposal

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The votes are in and the Uniswap community has spoken. Interestingly, almost 100% of the votes on a proposal to deploy Uniswap on Polygon were in favor of the integration. Thus, clearly highlighting the explosive popularity that layer-2 protocols have been receiving of late.

Almost a week ago, Polygon developers had put forward a proposal on Uniswap’s governance portal. This, in order to pitch their goals of integration to the larger Uniswap community. The first phase of the governance process was initiated on 23 November. It encompassed the Temperature Check Poll, which tried to gauge an initial consensus on whether the proposal is even worth going ahead with.

Reportedly, over 7.79 million Uniswap holders voted yes to deploying Uniswap V3 to the Polygon PoS chain. Well, only 25,000 favorable votes were required for the proposal to move on to the next phase.

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Polygon stated that “this is the right moment for this deployment to happen.” Since it could drastically decrease the transaction fee and time that users spend on the network. Especially, while interacting with Ethereum. Besides, expanding the decentralized exchange’s user base and revenues through scalability solutions.

The top DEXs like Sushiswap and Aave have already been deployed on Polygon. Well, the L2 protocol is ready to even allocate huge capital for this integration. Primarily, due to Uniswap’s respectable market position.

This includes participation in the design and execution of liquidity mining campaigns. In addition to the promotion of Uniswap V3 as a “money lego.”

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Now that the temperature check poll has delivered a favorable outcome, the proposal will be moving to the next stage. It will be the “Consensus Check.” It requires 50,000 affirmative votes to be passed to the final stage of governance. Well, the purpose of the Consensus Check is to start a formal discussion by creating a new poll based on the feedback from the Temperature Check.

When one Twitter user pointed out that it could take months for the deployment to go live, Polygon co-founder Mihailo Bjelic replied,

“It can be done much quicker, assuming the governance process finishes successfully.”

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Furthermore, with the overwhelming support from the Uniswap community, a delay in this process would rather be unlikely at this point.

In fact, owing to the soaring gas fee and longer transaction time, many are migrating to Layer-2 protocols. It scales the network and drastically increases its throughput. Not to forget, Polygon has turned out to be one of the most successful of those, with around $4.74 billion total value locked at press time.

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Analyzing what exactly is the state of Uniswap’s investors

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Uniswap [UNI], despite being a top-20 cryptocurrency, has been going on without an entire cohort of investors in its bag. However, even though investors managed to turn that around, the altcoin has been relentless and investors are losing patience due to UNI’s ongoing price action.

Uniswap going down?

Uniswap is one of the biggest DEXs on Ethereum and in the market. And yet, its performance week-on-week has made investors concerned about their investments.

According to a Crypto.com report, Uniswap was the worst-performing DEX over the previous week with almost 24.36% of its market cap and 14% of its average weekly volumes observing a depreciation.

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DEXes performance | Source: Crypto.com

UNI holders, on the contrary, from September onwards, finally crossed an important milestone of holding their assets for more than 1 year, leading to 47k addresses becoming the first-ever Long term Holders on the network. Increasing Month-on-Month, their percentage crossed 17% less than 24 hours ago. 

Uniswap holders distribution | Source: Intotheblock – AMBCrypto

Alas, this one positive development is not enough to counter the effects of a dejected market, one where UNI is unable to rise at all.

While the month of October wasn’t as harmful thanks to its consolidation, all of that safety was stripped away after UNI finally fell through the $23-support level. At the time of writing, it was looking at the critical support of $18.9.

Uniswap price action | Source: TradingView – AMBCrypto

Furthermore, the rising losses have led to over 52% of the addresses losing their profits. It is actually the worst condition investors have been in since the dip in July.

Uniswap profitable addresses | Source: Intotheblock – AMBCrypto

This 2 month-long price pattern explains why investors aren’t really moving their UNI. As a result, the number of transactions has fallen to 1.2k. This further resulted in UNI not changing hands as frequently and the network’s velocity falling to a 7 month low.

On the other hand, thanks to the ongoing market movement, volatility has fallen to its all-time low. This could prove to be essential for a sustainable recovery on the charts.

Uniswap volatility | Source: Intotheblock – AMBCrypto

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