Why can’t Uniswap be charged after it stopped mining?

The suspension of Uniswap mining was one of the major events in November. The market once expected that after Uniswap stopped mining, due to the decrease in output and the reduction of selling pressure in the secondary market, Uniswap's tokens would provide certain support.

However, after Uniswap stopped mining, TVL (locked value) plummeted by nearly half, and the price of UNI fell by more than 20% in the next four days, and the trading volume once fell by more than 50%. Now that half of the time has passed since Uniswap stopped mining, although the price of Uniswap has gradually stabilized, it has never taken off after the mining was stopped, and the TVL, which has been severely damaged, is still halved compared to before the mining was stopped.

Uniswap extends liquidity mining?

After Uniswap stopped mining, the subsequent development of the project has been hotly debated by community followers. The discussion includes reflecting on whether liquidity is necessary, and some radicals even suggested that users of the Uniswap client should be rewarded.

The controversy still surrounds the subsequent supply of Uniswap's token UNI.

Today, Uniswap's proposal to extend liquidity mining became a formal governance proposal, which was successfully passed with 90.81% support. The proposal aims to maintain the status quo, retaining four liquidity pools but reducing incentives.

The community’s thoughts on maintaining liquidity mining are mainly as follows:

1. Liquidity mining is useful for allocating UNI

2. UNI allocation is useful for protocol decentralization

3. The decentralization of the protocol is useful for effective governance

However, the total amount of UNI distributed each month will be reduced from the original 10 million UNI per month to 5 million UNI per month for two months. In other words, UNI will open liquidity mining after the halving in the next two months.

The allocation of the four liquidity pools is as follows:

1. WBTC/ETH-1.67 million UNI/month

2. USDC/ETH-1.25 million UNI/month

3. USDT/ETH-1.25 million UNI/month

4. DAI/ETH-830,000 UNI/month

After the proposal progress update, UNI saw a slight increase within 24 hours. As of press time, the price of UNI was above $3.5 per coin, and it has not returned to the level before the mining suspension. Steven, co-founder of Chainhill, told Babbitt that the weakening of LP enthusiasm ultimately affected the depth of the trading pool and had a certain impact on the fundamentals of Uniswap.

“The current market focus will be on a series of innovative exchanges, such as attempts to reduce impermanent loss and decentralized exchanges for futures options. And Andre, the founder of YFI, has already started working on options, spot trading, and lending. Now it depends on how Uniswap V3 will improve. It is said that it will switch back to the limit order book, but it is still unknown whether it can be improved.”

Pay attention to new ways to play DeFi

The suspension of Uniswap mining has brought opportunities to both direct and indirect competitors. The most commendable one is Sushiswap’s counterattack. Taking advantage of the suspension of Uniswap mining, it launched a small vampire attack, temporarily taking over nearly half of Uniswap’s funds, and the coin price reversed its downward trend.

Although Sushiswap's TVL was subsequently overtaken by Curve, in the past two weeks, the volatile SUSHI has stabilized above $1.4 per coin, and several improvement plans for Sushiswap are being put on the agenda, including lending, insurance, options, etc.

Last week, YFI founder Andre Cronje published an article introducing his new project Deriswap, and said that he was fascinated by capital efficiency. It is reported that Deriswap is a comprehensive work that covers options, futures, lending, secondary markets and other functions. At present, Andre Cronje has not yet announced more information.

According to DeFiPulse data, the total TVL of derivatives reached nearly 900 million US dollars, of which the locked-in amount reached 50 million US dollars. The locked-in amount of Hegic options product has doubled in the past 30 days. Well-known investment institutions such as Multicoin Capital, Three Arrows Capital, and Coinbase ventures have already bet on the DeFi derivatives track.

Faced with evolved competitors, Uniswap clearly needs to keep up with the times.

However, it is worth noting that after Uniswap stopped mining, according to DeFiplus data, the TVL of the DeFi market did not continue to grow in the past 13 days, but entered a period of volatility (even a slight decline). Some analysts believe that part of the funds escaped and participated in another closure this year: ETH2.0.