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Inside the DEX war for your cryptocurrency

Photo of: Nathan VDH
by Nathan VDH

Decentralized Exchanges (DEX) compete fiercely for liquidity providers. SushiSwap and Bancor are offering increased rewards to attract these funds. And Uniswap is currently the big loser.

DeFi, your ruthless world. Leading DeFi protocols so far according to the DeFi Pulse indicator, the Uniswap DEX has seen its total value locked (TVL) melt by more than 50% in 24 hours. As a result, the crypto-actives in its smart contracts plunged on November 14 from 3.07 to 1.3 billion dollars.

The previously available cryptocurrency still exists, however. They have simply been transferred by their holders to other DeFi protocols. Services such as SushiSwap were able to attract cash providers with more attractive promises of returns.

SushiSwap, and Bancor as well, have anticipated the end of the UNI Token Awards from Uniswap. On the same day, competitors announced a new incentive scheme for four 4 cash pools previously handled by Uniswap.

The Uniswap fork was the first to react. Sushiswap attacked its competitor head-on by offering rewards to liquidity providers in the ETH/USDT, ETH/USDC, ETH/DAI and ETH/WBTC pools.

The effect was immediate. On November 14, SushiSwap posted a TVL of approximately $280 million. Since the 17th, this cash has been skyrocketing and now exceeds one billion dollars (+300% in one week).

In the ranking of DeFi protocols, DEX is now just behind Uniswap. But as Cointelegraph points out, SushiSwap is not the only author of a so-called “vampire” campaign of Uniswap liquidity.

On November 17, Bancor also unveiled a cash mining program, including retroactive rewards. And all this is fair game according to 1inch CEO and co-founder Sergej Kunz.

“At the moment, we see many more projects launching incentives after Uniswap is over. As we are convinced that our Mooniswap protocol has a lot of potential to unlock while attracting additional cash, we have decided to announce our new liquidity mining program in order to chase the cash released by Uniswap”.

However, DEX does not intend to remain inactive. A governance proposal has been put to a vote by UNI token holders. It suggests reinstating the previous rewards program in order to attract cash providers again.

However, since the implementation of a decentralized governance system, no proposal has had sufficient participation to be validated. 40 million UNI tokens are needed to achieve this. 99.4% of voters, however, approve the restoration of the liquidity program. However, the threshold of 40 million UNI tokens is not reached.