- After a multi-million dollar exploit on Curve Finance, traders have turned their attention to the competing Uniswap’s UNI token.
- Funding rates for UNI perpetual futures have skyrocketed, suggesting market confidence in Uniswap’s potential to gain more market share post-exploit.
The crypto trading world has seen a shift in favor of Uniswap’s UNI token following a sizeable exploit on its rival, Curve Finance, a stablecoin-focused decentralized exchange (DEX). The unexpected event has led traders to consider the potential of Uniswap’s native token, with funding rates for perpetual futures tied to UNI soaring to an annualized 19%, as per Matrixport’s data.
A Favorable Market Position for UNI
A positive funding rate typically indicates a perpetual contract’s price trading at a premium to the mark price, also known as the estimated true value of a contract or “marking-to-market.” This trend further suggests that traders with leveraged buy positions, or ‘longs’, are dominating and willing to fund ‘shorts’ to keep their positions active.
“Traders are gearing up for Uniswap to secure an even larger market share following the CRV exploit, with the UNI token perpetuals trading at nearly a 20% premium,”
says Markus Thielen, Matrixport’s Head of Research and Strategy.
On the flip side, Curve Finance, the third-largest DEX, fell prey to a flash loan exploit jeopardizing $100 million worth of cryptocurrency. This incident led to a steep drop in the value of Curve DAO’s native CRV token by over 15% to $0.63. Such a quick decrease added an additional risk element, potentially endangering the liquidation of $70 million worth of Curve’s founder borrowed position.
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Despite this alarming scenario, the perpetual futures market remains undeterred, with funding rates in CRV and AAVE markets maintaining above zero. Thielen points out that
“CRV DAO perp futures continue to trade at a slight premium, showing that traders are more focused on reallocating positions away from the DEX (in terms of TVL) rather than shorting the token.”
Post-exploit, Curve Finance witnessed a drop in its total value locked (TVL) from $3.2 billion to $1.8 billion according to DeFiLlama’s data. Meanwhile, Uniswap maintained a steady TVL around $3.8 billion, and AAVE saw a decline from $5.85 billion to $5.37 billion.
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