Uniswap and DEX benefit from centralized exchanges for market growth. Instances, where decentralization is not truly the case, occurred in the past, when Bancor Network, a decentralized liquidity protocol, was hacked by $23.5 million owners, froze assets to prevent further financial damages. Still, this brings into question the decentralization notion.
Uniswap was subjected to high transaction fees once Ethereum started gaining momentum. Fees on the network would surpass $100, create opportunities for additional exchanges to gain a market share. As such PancakeSwap and, most recently, QuickSwap position themselves as credible competitors in the market as they are built on Binance Smart Chance (BSC), respectively Polygon (MATIC) blockchain.
Ethereum has undergone a network update, increasing the block size from 12.5M to 15M. Network activity increasing, as it incentivized Uniswap users to increase the transaction load. Still, Uniswap holds the first-mover advantage despite previous concerns of high fees. Investing and providing liquidity on Uniswap required higher transaction fees, enabling only better-quality projects to succeed.
Uniswap and other decentralized exchanges possess more than a means to transact crypto without the need for a middleman. Their expansion into a market for blockchain enthusiasts creates a new avenue for discovery. To that end, DEX’s are paramount for cryptocurrency investors as it makes a level of transparency and accountability between investors.
Uniswap is the DeFi norm in 2021. After entering the Top 10 coins by market cap, Uniswap entered a recognition phase as it became more known to higher capital investors. With high fees being a concern, Starkware aims to develop a bridge between DeFi platforms and Ethereum’s layer 1 for users to transact gas-free, thus increasing the transaction power on the exchange.
Still, DeFi is an alluring aspect of blockchain technology. Uniswap has been included in Bitwise Investments, an investment fund, which will open more avenues for institutional investors to become acclimated with the DeFi space. As Bank of America highlighted, “DeFi is more disruptive than Bitcoin.” it positions Uniswap as the main contender to take over most of the DeFi market. UniSwap’s price movement reflects its intrinsic value, and as more investors being using the platform, with transaction fees lowering, UniSwap can be in for a yielding result.