DeFi
Uniswap A retailer hub? Average trade size drops from $30,000 to $1,000 in 2 years
Crypto and some key subsectors, like trading or minting decentralized finance (DeFi) or non-fungible tokens (NFT), remain vibrant. If activity is strongly influenced by prices, further changes depend not on how prices move but on time.
Uniswap users are increasingly posting small transactions
Events at Uniswap, one of the leading decentralized exchanges (DEXs) on Ethereum, are sparking the interest of Token Terminal, a blockchain analytics platform.
According to Token terminalA curious trend is occurring at Uniswap: as the Ethereum ecosystem grows and is expected to grow even more, the size of trades on Uniswap is rapidly decreasing.
Over the past two years, the average transaction size on the popular DEX has fallen from around $30,000 recorded in 2022 to around $1,000 at press time. Commentators believe this trend could indicate growing adoption, particularly among retailers.
Compared to institutions or crypto hedge funds that might want to trade huge amounts, most retailers lack these resources. They are more comfortable with smaller transaction sizes.
This observation makes sense, especially with the explosion of meme coins deployed on the main network or on layer 2 platforms like Base.
Although Uniswap was first launched on the Ethereum mainnet, it is also available on Base, Arbitrum, and Polygon. It allows the exchange of tokens in a low-fee environment.
On these platforms, market participants can trade on smaller sizes because they know that the fee impact will be lower than on the mainnet.
Another perspective suggests that the rise of competing DEXs built on alternative blockchains like Solana and BNB Channel could divert activity from Uniswap.
Modern blockchains like Solana offer faster transaction speeds and lower fees. With Ethereum processing 15 TPS optimally, the greater scalability and interoperability with the leading smart contract platform may appeal to some traders.
DEX Users Climb Rapidly as Ethereum Finds Regulatory Clarity
The decline in trade size is surprisingly accompanied by an increase in overall DEX activity. Another report from Token Terminal watch that monthly active traders on major DEXs, including Uniswap, stand at 11.2 million.
This is approximately 3 million less than the record posted in December 2021. This observation suggests that even as more traders post smaller sizes, more users are eager to explore and participate.
Even though Uniswap’s average transaction size is decreasing, analysts are optimistic about the protocol and UNI, its native token. The platform plans to launch Uniswap v4 while Ethereum now has clear regulations, especially with an Ethereum spot exchange-traded fund (ETF) on the way.
Featured image from Adobe Stock, chart from TradingView