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Gas fees at lowest point in months encourage DeFi traders

Photo of: Joseph Stone
by Joseph Stone

The crypto and Ether crash is making DEXs and in particular Uniswap happy. The decentralized exchange sees its V3 soar, as does the volume of transactions.
The crypto-asset crisis has taken its toll. The main cryptocurrencies were sinking into the red. This was the case for Bitcoin, which gave up nearly 50%. For Ether too, the fall was brutal. The value of the ETH fell to 1853 dollars.

In 11 days, this represented a drop of about 70% in the price of Ethereum. Since then, the world’s 2nd largest cryptocurrency is regaining ground. Volatility remains high, however. On May 28 at 12pm, it was down 11%.

In the world of DeFi, too, the crisis has passed. However, tokens have since recovered some of the value lost at the height of the downturn. The high volatility of crypto-assets also has its advantages.

The primary beneficiaries are DEXs, the decentralized exchanges. “With increased volatility, DEX volume has reached historic highs,” Glassnode notes. On May 19, volume peaked at $11.7 billion on DEX.

This is a record high while crypto asset prices were all falling. The explanation is to be found on the investors’ side. Indeed, “the total number of unique traders over 30 days exceeded one million for the first time,” Glassnode measures.

So the DEXs are benefiting from the crisis, but this is even more true for one of them, the main one. Uniswap, the first DEX on Ethereum by volume, is worth 5.7 billion dollars. It also has 80% of the traders.

It was also a good time to migrate to Uniswap V3. In terms of daily volume, it now overtakes DEX version 2. But the exchange was also able to take advantage of the demand to collect record fees.

These fees even exceed those of the Bitcoin blockchain. They reached 4.5 million dollars in one day according to Cryptofees. That’s more than Uniswap v2 at $3.8 million. And for the king of crypto, BTC? The rise was $3.7 million.

Uniswap is also well ahead of its first competitor, SushiSwap, at $2.135 million. In terms of costs, gas in this case, however, it is still Ethereum that holds the top spot. They were $28.7 million on May 24, for example.

Could Uniswap be a player in the increase of these fees? DEX often gets this criticism. However, the fees the exchange charges are of a different order than those applied to Ethereum usage.