Uniswap, the former largest decentralized exchange platform by trading volume, is losing its position in DeFi rankings as its liquidity plummets. By mid-November the DEX platform had over $3 billion in locked value, making it the largest DeFi protocol. In today’s time, Uniswap is now the fifth-largest DeFi protocol, owing to its 60% loss in liquidity. Amid the low liquidity, the trading volumes in the DEX platform have continued to remain stable. Uniswap Trading Volume Remain Stable The main reason for the plunge in liquidity is the platform’s failure to hold a governance token prior to the end of its token farming incentive. Uniswap had no plans to extend its token farming incentive despite a proposal for temperature check voting. The total vote passed in favour consisted of 97.18% with over 16.8 million UNI tokens. While only 2.81% voted against it with 488,000 UNI. The total number that participated in the voting process consisted of 92 addresses with 68 in favour and 21 against it. There have been numerous discussions on liquidity farming, including a second Uniswap community call, However, as of yet, no concrete plans have emerged out of it. Trading Volume Does Not Correlate With Liquidity Financial metrics provider Token Terminal stated that trading volume does not appear to correlate with the total value locked or the liquidity deposited into the trading pools. Token Terminal stated on the gross merchandise value (GMV) or trading volume: “The total GMV for the past 30 days on Uniswap is around $10 billion. By comparison, SushiSwap, which had leached the lion’s share of this liquidity, only has around $1.4 billion in trading volume over the same period.” Although, this collateral is needed to reduce the price differences between opening and closing a trade. However, Token Terminal did indicate that it is a less accurate metric when measuring the actual performance of a DEX.
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