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Research Commentary: Is DeFi dead? Uniswap tells a different story…


Global financial markets continue to be extremely volatile. The Nasdaq Composite Index is down 29% this year and the 10-year US Treasury has almost doubled to 3.0%, a level not seen since late 2018. Crypto assets have faced significant struggles as well, with various large centralized finance (“CeFi”) institutions such as Celsius and Three Arrows Capital (3AC) becoming insolvent. Year to date, Bitcoin has fallen 55% and Ethereum had a drawdown close to 70%, while some decentralized finance (DeFi) protocols have fallen even more.


But it is worth highlighting how some “Blue-Chip” DeFi protocols have continued to operate superbly well during these very challenging times. Uniswap, a leading decentralized exchange (DEX) that has constantly held more than 50% market share of DEX traded volume since its inception (Figure 4 below) is one notable example of this strong performance. The exchange has continued delivering an independent, decentralized, 24/7, permissionless, and immutable solution that supports thousands of digital assets and stablecoins across the Ethereum Ecosystem. Hayden Adams, founder of Uniswap, summarized crypto market performance perfectly in a recent Tweet:


Source: https://twitter.com/haydenzadams/status/1544683239859699712?s=20&t=4CRMEaFjCE8V0NcWEffOeg


Uniswap remains one of the strongest brands in the crypto space and is known for its high-quality team and strong investor base. In May 2021, Uniswap’s governance token UNI reached its all time high (ATH) price of $44 per token (~$18 billion of circulating market capitalization). UNI is now trading at $5.00 ($3.7 billion of circulating market capitalization), an 88% price decline from ATH. However, Total Value Locked (TVL) has only fallen 42% from $8.6 billion to close to $5.0 billion, making Uniswap the fourth largest DeFi protocol in terms of TVL, according to DeFiLlama


DeFi protocols are usually cash-generating entities, which is different from other types of crypto assets. Uniswap has the largest cash flow of them all (see annualized revenue on Figure 5). The protocol revenue for the last twelve months (LTM) was roughly $1.32 billion, compared to $780 million at the time the UNI price peaked, a 68% increase despite the reduction in TVL.


Figure 1: Uniswap & UNI metrics - ATH Price in May/21 x Current Price in July/22


UNI Token Statistics




% Change






UNI Token Price





Circulating UNI Supply





Total UNI Supply





Circulating Market Cap

US$ Billion




Fully Diluted Market Cap

US$ Billion




Total Value Locked (TVL)

US$ Billion




LTM Revenues

US$ Billion




L3M Average Revenues - Annualized

US$ Billion




LTM Volume Traded

US$ Billion




L3M Average Volume - Annualized

US$ Billion




LTM Average charged fee






Circulating Market Cap / TVL





Fully Diluted Market Cap / TVL






Multiples based on Revenues


Circulating Market Cap / LTM Revenues





Circulating Market Cap / L3M Average Revenues - Annualized





Fully Diluted Market Cap / LTM Revenues





Fully Diluted Market Cap / L3M Average Revenues - Annualized





Sources: Coinmarket.com, TokenTerminal, Messari, Uniswap Site



In terms of volume traded, LTM total volume traded was $260 billion when UNI was at its ATH and now it is close to $725 billion despite the collapse in market capitalization. These trading volumes rival Coinbase’s volumes, per Figure 2 below. Coinbase is one of the leading crypto centralized exchanges. Coinbase shares have fallen 81% year to date and the company currently sits at a market capitalization of US$11 billion, compared to $3.7 billion for Uniswap.

Figure 2: Uniswap vs. Coinbase Traded Volume (7 Day Moving Average) - US$ bn

Source: COINGECKO and The Block Research. Updated: June 30, 2022


The difference between centralized and decentralized exchanges is that Uniswap’s transactions are all stored in the blockchain and publicly visible, whereas Coinbase’s transactions are not transparent and cannot be audited by the investor community. Another meaningful difference is that as Coinbase operates a centralized exchange, it holds user funds in custody. Decentralized exchange users, in contrast, self-custody assets in their own digital wallets. It is also important to highlight how different the cost structures of both businesses are: while Coinbase has more than 5,000 employees working full-time, Uniswap’s smart contracts operate autonomously, totally independent from human intervention with approximately 100 collaborators.

Figure 3: Uniswap Circulating Market Cap x Total Protocol Revenue

Source: Token Terminal

Figure 4: Uniswap share of total DEX volume traded on Ethereum

Source: Coingecko.com and The Block Research - Date: June/30/2022

Figure 5: Decentralized Exchanges Comparison

Source: Token Terminal


Despite all the market turmoil, Uniswap has been performing very well operationally. It is the leading DEX by far, rivaling Coinbase’s operational figures and on pace to generate close to $1.1 billion in protocol revenues in 2022 alone. Sitting at close to $3.7 billion in circulating market capitalization, Uniswap has been showing signs of strength even during unfavorable market conditions, an interesting story to monitor and a relevant case study for how some DeFi protocols can thrive during bull runs, while also being able to navigate bearish times.


Addendum: What is Uniswap?

Uniswap’s name may be used in reference to the following:


Uniswap Labs: the company behind the Uniswap Protocol as well as the web interface. It received investments from venture capital firms such as a16z, Paradigm Ventures, Union Square Ventures, and ParaFi. More recently, Uniswap Labs announced the acquisition of Genie (a NFT startup) to support the buying and selling of NFTs on its DEX.

The Uniswap Protocol: a decentralized exchange (DEX) built on the Ethereum blockchain that utilizes an automated market-making system rather than a traditional order-book. There are currently three versions of the Uniswap protocol: v1, v2, and v3. Each version of Uniswap, once deployed, will function in perpetuity, with 100% uptime, provided the continued existence of the Ethereum blockchain.

Uniswap Governance: a governance system for oversight of the Uniswap Protocol, enabled by the UNI token.

Uniswap History: Uniswap was created on November 2, 2018 by Hayden Adams, a former mechanical engineer at Siemens. The first version (v1) of the Uniswap protocol was published in November 2018 as a proof-of-concept for AMMs (Automated Market Makers). v2 was launched in May 2020 and v3 was launched in May 2021, introducing new options to allocate liquidity within a certain price range.

UNI Token:

  • UNI minted: 1 billion UNI were minted at genesis and are planned to be distributed over four years. About 60% will go to community members and the remaining 40% to employees, investors, and advisors. After four years, there will be a perpetual 2% inflation rate.

  • Rights granted to token holders:

    • Voting on Uniswap Governance Proposals

    • Collective Ownership of UNI Community Treasury (controlled by Governance Proposals)

    • Protocol Fee Switch Mechanism:

      • Hardcoded on the smart contracts

        • v2: a flat 5 basis point (16.66% of Liquidity Providers Fees)

        • v3: more flexible (per-pool basis) and set between 10% and 25% of LP Fees

      • Currently turned-off. It requires Governance Proposal Approval to turn-on.

    • Ownership of the Uniswap ENS domain name

Uniswap Revenue:

  • Uniswap collects revenues from transactions by charging fees for each order executed.

    • Currently, Uniswap v2 offers 1 fee tier: 0.30% on all trades executed. Uniswap v3 offers 3 tiers: 0.05% for like-kind asset pairs such as USDC / DAI, 0.30% for pairs like ETH / DAI and 1.00% for more exotic assets.

  • Notably, since Uniswap launched v3 of its smart contract, traded volume has migrated considerably from v2 to v3 version (96% of currently traded volume is on v3).

  • Since v3 was launched (May 2021), the average fee charged for all trades executed on the protocol has declined from 0.30% to roughly 0.18%.

    • Although the average fee decreased, total revenues have been increasing due to higher volumes traded.

  • In 2021, Uniswap collected a total of $1.5 billion in fees from trades executed.

  • Uniswap has generated more than $2.2 billion in fees since its inception.

Uniswap Volumes:

  • In 2021, Uniswap traded more than $600 billion in crypto assets.

  • Uniswap has traded more than $1 trillion since DeFi Summer in May/2020.






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