Crypto News

Uniswap’s UNI Among Best “Buy The Dip” Crypto Bets This Year; Here’s Why

CoiNChapter Uniswap UNI

Despite the recent cryptocurrency market dip, it seems as if most assets are on the path to recovery. Investors and speculators looking to diversify their portfolios may want to pay attention to UNI. The nearly instant success of Uniswap V3 paves the way for a bright future.

Uniswap V3 Launch is A Success

Fans and loyal users of the Uniswap decentralized exchange and its UNI token have looked forward to the Uniswap V3 migration. The new update introduces many changes, including giving liquidity providers a chance to determine the ‘range’ for which they provide liquidity.  Although the team will roll out the scaling solution at a later stage, the success of this major upgrade has not gone by unnoticed.

Also read: Death Cross Looms Over VeChain (VET) Market; What to Expect?

Compared to some of its competitors, Uniswap V3 is beating the competition hands down. Not only has the platform taken over Bancor, Balancer, Curve, and 0x, but it also surpassed Sushiswap in volume. A somewhat surprising development, as many people still hope to see SushiSwap overtake Uniswap at some point. The data by message confirms that might not necessarily be the case. 

UNI, Uniswap’s UNI Among Best “Buy The Dip” Crypto Bets This Year; Here’s Why
Uniswap V3 Performance – Source: Messari

As Uniswap V3 already processes over 80% of Uniswap V2 in quick succession, it is a matter of time before Uniswap V2 is overtaken. That is only normal, although many users still need to migrate their liquidity, including the UNI markets. Doing so is an expensive process due to the current Ethereum gas fees.  Spending over $200 to migrate a liquidity pool is far from ideal.

What is even more impressive is how Uniswap V3 notes this high volume despite a much lower TVL. With roughly 15% of Uniswap V2’s total value locked, Uniswap V3 displays its potential right away. It is also the only AMM DEX to note a higher trading volume than its total value locked. More importantly, it does so daily, which is somewhat unusual in this industry. 

What This Means For UNI

The ongoing success of Uniswap as a platform can bring more value to its native UNI token. As Uniswap already maintains a market share of 61% – by combining V2 and V3 – it is a matter of time until it dwarfs all the competitors even further. With surging DEX volumes, one would expect there to be more competition in this space. However, most trades will occur on Uniswap V3 and V2, by the look of things.

UNI, Uniswap’s UNI Among Best “Buy The Dip” Crypto Bets This Year; Here’s Why
Uniswap DEX Dominance – Source: Messari

Although the competition isn’t sitting still, their upgrades may come too late. Achieving capital efficiency has become the go-to approach for all decentralized exchanges on the market. SushiSwap and Balancer have significant upgrades in the pipelines, but they are not ready for deployment. The longer this process takes, the bigger the lead by Uniswap will become. Moreover, one has to remember Uniswap V3 will continue to push for improvements. As there are no liquidity provision incentives on V3 as of yet, the coming weeks and months will prove crucial for the entire DEX industry. 

Because of this competitive advantage, it is relatively safe to bet on UNI as a “major asset” for 2021. The governance token has seen a substantial price rise to $44.92 in the past year, a level that other DEX currencies have not been able to match. UNI Remains a popular asset for yield farmers and liquidity miners, ensuring demand for this token will not dry up overnight. 

Despite the option to use UNI for liquidity, the majority of trading does not originate from Uniswap. Instead, the token changes hands regularly on Huobi Global, OKEx, Binance, and other platforms. It confirms how investors and speculators actively seek exposure to UNI and the future price potential it may provide. Setting a new all-time high price later this year is very plausible for this currency, 

Header image courtesy of Pixabay

How useful was this post?

Click on a star to rate it!

JP Buntinx_CoinChapter
Jean-Pierre Buntinx

JP Buntinx has been writing about cryptocurrency since 2012. His interest in crypto, blockchain, fintech, and finance allows him to cover a broad range of different topics.

Related "Altcoin" News