NOIDA (CoinChapter.com) — Uniswap’s latest announcement of Unichain, a new Layer 2 (L2) blockchain, triggered a 12% surge in the UNI token on Oct. 10, reflecting strong market interest. The UNI token, underperforming compared to its peak, reached $8.14, signaling renewed optimism.
Moreover, the Unichain launch claims to address core issues in decentralized finance (DeFi), such as high transaction fees and slow processing times on Ethereum, positioning Uniswap to remain competitive in the evolving DeFi landscape.
Uniswap’s Claimed Solution to DeFi Challenges
Uniswap’s new Layer 2 blockchain, Unichain, launched on Oct. 10, 2024, aims to address long-standing challenges in decentralized finance (DeFi), such as high transaction fees and slow processing times on Ethereum.
Built on the Optimism Superchain, Unichain promises faster transactions, with one-second block times and sub-block times of 250 milliseconds.
Uniswap Labs claims the new L2 will reduce transaction fees by around 95% compared to Ethereum’s Layer 1, enhancing cross-chain liquidity through seamless multi-chain swaps. These improvements aim to make decentralized exchanges more accessible and efficient.
Uniswap’s latest Layer 2 blockchain, Unichain, aims to bring significant financial changes to the platform, particularly for Uniswap Labs and UNI token holders.
According to Michael Nadeau, founder of DeFi Report, Unichain would allow Uniswap to capture nearly $500 million annually that would have previously gone to external validators on Ethereum and other networks.
Approximately $368 million in settlement fees will now flow to Uniswap Labs and potentially to UNI holders, who could benefit from staking mechanisms.
Unichain’s economic impact doesn’t stop there. Nadeau estimates that Uniswap Labs will also capture Maximum Extractable Value (MEV), representing about 10% of total Uniswap fees (around $100 million annually), as the validators on Unichain will be under its control.
Uniswap could opt to share these revenues with UNI holders, making the token more appealing to investors.
Moreover, Uniswap’s liquidity providers (LPs) stand to gain from this new arrangement. In addition to receiving 100% of trading fees, LPs might participate in the settlement and MEV captures through staking on Unichain.
However, the launch of Unichain could lead to losses for Ethereum validators, who stand to lose a significant share of the $368 million in Uniswap-related settlement fees. ETH token holders might also face reduced fee burns, weakening Ethereum’s deflationary dynamics.
Bullish Setup Could Help Continue Rally
A bullish technical setup called the ‘falling wedge‘ adds to the bullish cues favoring the UNI USD pair.
Two converging downward trendlines that connect lower highs and lower lows form the falling wedge, a bullish reversal. The narrowing structure shows that, despite the ongoing downtrend, the bearish momentum is gradually weakening, often preceding an upward breakout.
The key feature of a falling wedge is that the slope of the lower trendline is steeper than that of the upper trendline, indicating that selling pressure is dissipating. When the breakout occurs—typically upward—it signals buyers taking control.
To estimate the potential price target after a breakout, traders measure the vertical distance between the widest points of the wedge and project that range from the breakout point upwards.
According to technical analysis rules, the UNI USD conversion rate might rally nearly 215% from its current level to reach the pattern’s projected target of around $24.6.
