The recent introduction of fees by Uniswap has caused speculation about a potential “sell the news” reaction. However, a closer examination reveals a different perspective. Despite a 5% decline in the price of UNI since the announcement, Uniswap’s on-chain activity has actually increased.
According to a recent insight by Santiment, there is a noticeable disparity between the diminishing price of UNI and the growing on-chain activity. The crypto analytic platform suggests that short-term UNI holders may be experiencing some pain based on the negative MVRV. However, metrics such as Active Addresses and Network Growth have surged to levels not seen since July of this year. Interestingly, this upward trend in on-chain activity has continued despite the downtrend in price.
Uniswap Labs, the organization behind the decentralized crypto exchange, implemented a 0.15% fee on trades involving ETH, USDC, and other tokens. This fee applies only to swaps executed through Uniswap Labs’ front end. It should be noted that this fee is separate from the protocol fee overseen by governance voters. Uniswap Labs has introduced this fee as part of their effort to sustainably fund their operations. Uniswap creator Hayden Adams has stated that this interface fee will enable them to continue their research, development, and expansion in the crypto and DeFi space.
Although the introduction of fees has led some investors to sell off their UNI holdings and create FUD (fear, uncertainty, and doubt), there has been discussion about the future of DeFi sparked by the upcoming Uniswap v4 pools, which will have an option for Know Your Customer (KYC) verification. Despite being an opt-in functionality, this development has generated conversations about the direction and potential of decentralized finance.
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