Uniswap does not need to issue COINS

Now, SushiSwap is a far cry from its debut.

At the very beginning, comments on the evolution of Uniswap and community robbery of VC once held SushiSwap to the altar. After the founder was exposed to control the SUSHI token worth $27 million, cashed out and left the market, there was a loophole in governance, and control was suddenly transferred to SBF and other magic scenes, SushiSwap's story began to decline gradually.

However, a variety of swap-copy disk followed, issued a variety of memes token, also let "Uniswap must issue money" view deeply popular, many people think that no Taiwan dollar is the biggest weakness of Uniswap.

Despite the froth and sentiment in the market, looking at DEX and AMM alone, we ask the question: does Uniswap really need to issue money?

At the moment, Uniswap has far more important things to do than issue money.

Uniswap has no "man" against it?

With only 500 lines of code, Uniswap has long been an integral part of the DeFi domain.

At the very beginning, Uniswap attracted attention because of the speed of coinage. The financing and launching of the project side were carried out simultaneously. The project side divided the total amount of COINS into several shares, among which the reserved part was put on Uniswap, and the asset was injected into two pools, which was equivalent to setting a price by itself, and then it could be traded. It can be done "in as little as 10 minutes" and "costs about 0.3 ETH."

This approach directly impacts the original blockchain project operation mode. The cost of launching new projects is getting lower and lower, and a large number of projects are falling into the sand.

From the birthplace of the original potential project to the present, the status of Uniswap has quietly changed. Uniswap has become an important link in liquid mining: no matter whether new or old project parties want to do liquid mining, they will first go to Uniswap online trading pair to attract users to inject funds into the pool, and then conduct mining after obtaining corresponding tokens.

To provide liquidity for the capital pool to obtain the fee sharing platform, has long been insufficient to meet the needs of investors. When the DeFi project's scrip/governance scrip gameplay caught on and Uniswap's updated SushiSwap announced the introduction of the scrip incentive, a lot of people jumped on it.

At the beginning of the migration, SushiSwap's total locked position rose to $1.5 billion at one time, while Uniswap reduced to $400 million, making people mistakenly believe that SushiSwap "stole" the latter's liquidity. Some people even asserted that only by issuing money quickly could Uniswap be "saved".

In fact, before SushiSwap came into being, Uniswap's lock volume had reached 400 million. After SushiSwap's migration, Uniswap's lock volume was still $400 million. SushiSwap did not steal Uniswap's liquidity, but the extra nearly $1 billion of liquidity was originally brought by SushiSwap, which only shows that the issue of money did indeed cause a spike in lock volume in a short period of time.

And given that SushiSwap's lock stock and currency prices are no longer at their peak, issuing money doesn't seem to give the DEX a brighter future than Uniswap's.

For those who first noticed the great Uniswap migration, the issue of money was not really the most important thing facing Uniswap.

Why doesn't Uniswap need to rush out the money

At the time SushiSwap used COINS to attract LP migration on Uniswap, one wondered if Uniswap V3 would also use COINS to grab back traffic. On the day SushiSwap officially moved to LP, Uniswap founder Hayden Adams posted a picture of Uniswap's new Logo, and many people assumed that V3 would be accompanied by the nt announcement.

But does Uniswap really need to issue money? Or is DEX a necessary condition for jacking?

"Issuing money is not something that Uniswap has to do right now." Li Ming, founder of Tops, a decentralized asset selection platform, said.

SushiSwap's move to follow the "trend" has indeed gained popularity since issuing COINS has become the target of many DeFi projects. After SushiSwap, many similar copycat dishes soon came online, creating a scenario in which an issuing project could replace Uniswap, but this is not the case.

In since li Ming's view, only from Uniswap Swap itself efficiency and way to trade, it is far from can rise to match CeFi, there is still a big room to improve and optimize the room, "the most prominent problem is impermanence losses, some projects have started to" harvest "by means of market users, but the user is not aware of this kind of behavior."

Brush count is the default on centralised trading platforms, and now it's starting to spread to DEX.

Wang Jia, a front-line practitioner, also told RHYTHM BlockBeats that more and more market makers have emerged in Uniswap, which specializes in liquidity pool transactions. In order to attract users' attention and make the data better, the project side began to realize that the transaction pairs on Uniswap also need to be swiped.

"It's the same as CEX, only the process is more transparent."

Because all traders operating behavior were recorded on the chain, the cost and risk in project party do is higher than the original, "before the exchange market is a string of data in the background, but now the Gas fee is also a significant overhead", "market makers before you just need to get permission operation, unable to control money, but after the DEX, market makers need to hold assets to operate, this led to the current project is only a small amount of operation, we can't easily play big."

The only way to tell is to look at the transaction records, the same address has not been a number of transactions back and forth. This means that, in the face of many just online created dozens of times, hundreds of times the growth of the myth of the project, investors need to be more discerning, because this is likely to be the project side itself, in order to attract users to take over.

Besides can improve transaction efficiency, at present still have a lot of problems around the Uniswap, such as in Uniswap liquidity pool is set above amount is larger, the better, set up multiple slippage of the pool will be lower, the benefits of the LP will better, tokens of pricing and clinch a deal the way and no optimization space, and so on, all of these are still need Uniswap team spend more energy to think about and solve.

"Right now on Uniswap users can only see basic data such as liquidity and volume, but in reality, data such as the number of pools of liquidity and changes in the number of transactions may have a greater impact on prices, or signal a more pronounced rise and fall." These plates have not been perfected in Uniswap, and it is because there is still a gap in the market that "nearly 20" teams specializing in Uniswap trading experience appear on the market.

In addition to optimising the trading experience, Li notes that currently Uniswap is not friendly from a developer's point of view to teams developing derivatives or features based on it: "Sometimes Uniswap provides data that is not timely, or missing, wrong, or even without data."

When choosing a trading platform, the ultimate goal of investors is to find good assets and obtain high returns. However, if they simply copy Uniswap code and only add token incentive model, rather than optimize and improve the business itself, even if they succeed in a short period of time, it will be difficult to maintain their longevity.

We can think of a simple question, you send a coin, is the choice on Uniswap? Or on other copy disk Swap?

"Uniswap still has a brand." Liu Jie, founder of MCDEX, a decentralised derivatives trading platform, represents a large chunk of the population.

And a variety of Swap copy plate once let investors think they are given the VC or project team equal qualifications, but in fact, liquidity mining is not fair.

Mobile mining is unfair

Now DeFi Mobile Mining, in the spirit of community driven, under the banner of no pre-digging, no private equity and no VC, creates the concept of "fairness" and sends the signal that "no one will cut you". Many people think that they are only mining, do the seller of the secondary market, will not be in the secondary market, the risk is very small, the return will be far beyond expectations.

But really? Is mobile mining absolutely fair? Are those projects that issue money really not profitable?

No, they have at least three ways of making money.

Harvest the LP

The first is the harvesting liquidity provider (LP), or more precisely, the ETH in LP's hands.

In the AMM mechanism, LP market making needs to add equal assets in two pools, such as the ETH/USDT pool to make the market, the ETH pool to add 1 ETH, and the EQUIVALENT 360 USDT of 1 ETH in THE USDT to become LP. If ETH falls by 20%, THE ETH in LP's hands will become more, while the USDT will become less, reaching 1:1 and the product of pool fluidity equals constant, which will cause the loss of impermanence.

But in the limit, if the price of one asset in the pool plummets, then LP will have more COINS in its hand, and the other pool will have fewer COINS

In the KIMCHI KIMCHI project, for example, the market-making LP in the KIMCHI/ETH pool is on the side of harvesting.

The price of KIMCHI plummeted in a short time, and the NUMBER of KIMCHI and ETH in the pool became more and more, while the price of KIMCHI became lower and lower, so the ETH of LP was harvested. This would have been a type of impermanent loss, but when the pool token went to extremes, the impermanent loss was upgraded to being harvested.

Of course, this will only happen in pools that provide liquidity for mining tokens. For example, SUSHI/ETH, KIMCHI/ETH, if LP chooses other pools, it will be more likely to avoid this risk, but the project side will not let you do so.

In the mining design, the project side will design this kind of pool reward far more than other pools, such as up to 5 times of the reward. LP's mining efficiency in this pool is 5 times of that of other pools. Users who do not understand the risks are easily attracted to enter the pool with high returns.

In addition, the project side will even add several pools containing such token mining, the annual return of hundreds of times. For example, in YUNO project, 6 out of 8 mining pools need YUNO to dig. In this case, the probability of LP harvesting is 75%.

The project party carries private goods

Private goods generally refer to a small number of currencies. In general, mainstream COINS will be used for liquid mining, but some project parties will use small COINS to mine, so as to increase the demand for small COINS. Like KIMCHI, who was on fire some time ago.

Interestingly, KIMCHI farm only chose YFI, BAND, ETH the three more mainstream tokens, it also secretly entrainment and percentage of income not only raised the KIMCHI tokens, one is not popular TEND tokens into tokens, pool, this led to TEND the tokens from the most high $1.2 to $2.7, a short period of time to rise as high as 125%.

Mining tax

Another hidden trick is that the project side makes a profit by receiving a portion of the mining reward.

In many DeFi projects, 10% of the mining bonus is typically collected by the project side, equivalent to seigniorage. The classic example of this is SUSHI, which was used by Nomi Chef, SushiSwap's founder, to cash out 18,000 ETH.

Since SushiSwap is already the focus of the market, the community will be constantly monitoring the founding team's every move, but it is likely that more of the project parties will be cashing out after collecting the mining tax.

Again, if you are the project side, if your token wants to go online to the liquidity mining game, would you go to Uniswap or SushiSwap?

SushiSwap and other Fork projects did gain widespread market attention in a short time by issuing money first, but the free-riding didn't seem to have allowed them to establish a solid moat.

"Sending money in a short period of time could really get a lot of investors excited." 'But if Uniswap is going to be an industry benchmark, it's going to have to constantly optimize its efficiency and its products so that it can really differentiate itself from its peers and become a standard-setter for the whole DEX,' Mr. Li said.

Farther is better than faster. Now SushiSwap, which got its cold start by issuing COINS, is in a quagmire of how to make tokens go up. Perhaps the Uniswap team, who saw this early, did not make issuing COINS a priority.

At the request of interviewees, Wang Jia appeared in the article as a pseudonym.

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia