Cryptocurrency

Uniswap is ready for the spotlight; the reason is quite unsurprising


The cryptocurrency market crash this week was quite extreme on market individuals. However, regardless of this, Uniswap (UNI) noticed a chance to spotlight why decentralized exchanges is likely to be the higher choice.


Read UNI’s worth prediction for 2023-2024


In a latest Twitter submit, Uniswap famous that decentralized exchanges (DEXs) would not have central factors of failure, and identified this week’s black swan, FTX, for example.

During FTX’s crash, it turned clear that Sam Bankman-Fried’s change had main liquidity points. As a consequence, there was a financial institution run on the change as traders rushed to drag out their funds.

FTX, because of this, halted withdrawals in a bid to manage the state of affairs. DEXs are a superior choice in that regard as a result of they encourage self-custody.

There have been a number of related incidents in the previous the place centralized exchanges halted withdrawals as effectively, thus placing merchants at a drawback.

Assessing Uniswap’s efficiency

The adoption of decentralized exchanges is sure to extend as such incidents pile up. Uniswap is amongst the largest DEXs when it comes to quantity. The DEX registered an additional enhance in quantity over the final 4 weeks, which was fueled by the enhance in lively addresses.

Source: Glassnode

Despite this, DEXs even have their liquidity-related challenges. For instance, they see a rise in exit liquidity, particularly beneath tough market circumstances. This is the identical factor that occurred final week, on account of which its liquidity dropped by a considerable quantity.

Uniswap Liquidity

Source: Glassnode

As far as DeFi progress is involved, Uniswap’s progress has largely been affected by market occasions. The demand for the platform dropped in periods of low volatility, whereas it registered noteworthy progress in periods of excessive volatility.

Uniswap network growth

Source: Santiment

The bearish market circumstances have triggered a rise in Uniswap’s utility. This confirms that a number of merchants desire utilizing the DEX. But does this sort of demand impression the worth of Uniswap’s native token, UNI?

The natural demand for UNI does have an effect on its worth. However, retail demand has the largest impression on the worth, which implies by extension it will get affected by market occasions. This is why UNI crashed by roughly 38% this week.

Uniswap price action

Source: TradingView

UNI remained above its June lows regardless of the sturdy pullback. This means there was notably much less UNI promote stress than there was throughout the earlier main crash. Perhaps as a result of this time the crash didn’t have an effect on the liquidity swimming pools as a lot.

This is additionally a wholesome remark for UNI’s capability to recuperate shortly. Its 14% restoration in the final 24 hours underscores the return of bullish demand after dipping into oversold territory.

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