- Curve’s exploit not only impacted its own ecosystem but triggered disturbances in Uniswap’s market dynamics.
- Uniswap witnessed a surge in activity, yet faced declining revenues and increased MEV bot intrusions.
Unraveling the Domino Effect in DeFi
The decentralized finance (DeFi) realm felt a tremor when Curve faced a security compromise. This event’s ripple effects were starkly evident in Uniswap’s market activities, emphasizing the interdependent nature of the blockchain-based financial sector.
Turbulent Waters in Uniswap’s Pool
The wake of Curve’s exploit observed some unsettling patterns in both Curve’s 3pool and Uniswap V3’s predominant USDT-USDC pool. The timeline pinpoints a rise in USDT selling around mid-July, with Uniswap registering nearly $100 million in net selling between 15th to 22nd July. This wave of net selling ebbed towards July’s end, only to reappear with renewed vigor, aligning with the timing of Curve’s hack.
These dynamics, coupled with a similar selling trend in Curve amounting to $35 million and an existing 60% dominance of USDT in the Curve pool, drew increased scrutiny. USDT, a stablecoin pegged to the dollar, even displayed a slight decline below its typical value on centralized exchanges. Such deviations prompted analysts and investors to revisit and assess the fundamental drivers steering the market.
While Uniswap experienced a 22.8% upswing in its activities over a month, its revenue trajectory followed a contrasting path, dipping by 12.2%, as reported by Token Terminal. Such disparities between heightened user activity and declining revenue generation flag concerns about the platform’s long-term economic viability.
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A notable subplot in this saga is the conspicuous surge in Miner Extractable Value (MEV) bots on Uniswap. MEV bots, for those unversed, are crafty algorithms that manipulate transaction orders for personal gain, often sidelining regular traders. A staggering 27% of all “sandwich attacks” executed by these bots were traced back to Uniswap, further complicating the narrative.
Tracking UNI’s Performance Amidst the Chaos
In light of these developments, UNI, Uniswap’s native token, has experienced a price contraction, moving from $6.60 to $5.84 within a week. This downtrend mirrors the broader sentiment of apprehension sweeping across the DeFi landscape.
A more granular look into Uniswap’s metrics reveals a diminishing trading velocity, suggesting a tapering trading enthusiasm amongst its user base. Concurrently, the platform’s network growth seems to be in a slump, hinting at a reduced inclination among new addresses to purchase UNI. Yet, a silver lining appears in the form of an amplified UNI supply among top addresses, suggesting that while retail investors might be hesitant, the “whales” or significant stakeholders might be gearing up for future market movements.
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