Uniswap incarnate aggregation platform to challenge CEX giants

“Our priority is to take some of the funds from the centralized exchange giants.” Recently, Mary-Catherine Lader, COO of Uniswap Labs, revealed his ambition.

Although Uniswap is the leader in the decentralized exchange (DEX) category of crypto assets, its trading volume is still far behind the centralized exchange (CEX) giants. On September 26, Uniswap’s 24-hour trading volume was $591 million. At the same time, Binance and FTX’s trading data for the same indicator were $15.27 billion and $1.464 billion, respectively.

Challenging CEX giants, why does Uniswap? Lader revealed that Uniswap will soon launch a one-stop NFT aggregation trading platform, which will help business growth; in addition, the Uniswap Foundation has funded a new product “Uniswap Diamond”, which attracts professional users.

Uniswap is constantly moving, but it is not difficult to catch up with CEX. On the one hand, the NFT market, which it regards as the incision of the aggregation platform, has been deserted for many days, the transaction volume has continued to slump, and the market base is difficult to bring scale to Uniswap; on the other hand, for the professional group of encrypted transactions, Uniswap lacks financial derivatives In the trading business, institutional users cannot hedge risks in its products, which makes it difficult to attract the great migration of professional traders.

Uniswap, as a CEX challenger, once again placed itself in the old story of DeFi and CeFi confrontation, but in the cold bear market, not many people listened to the story, but its practice of polishing the automatic market maker mechanism in the past adds to this story. some credibility.

Integrate NFT transaction business

There is no doubt that Uniswap is the largest decentralized trading application in the DeFi space. According to data from DeFiLlama, on September 26, Uniswap’s 24-hour trading volume was $591 million, ranking first among all DEXs and nearly $280 million more than RadioShack, which came in second.

But its ambitions don’t stop there.

Recently, at the Messari Mainnet conference in New York, Uniswap Labs COO Mary-Catherine Lader unabashedly expressed his ambitions for Uniswap to continue to increase the market share of the exchange, and its priority is to grow from the centralized exchange giant “Withdraw some funds” from the hands.

Uniswap incarnate aggregation platform to challenge CEX giants

24-hour trading volume ranking of DEX on the whole network

Although it is firmly ranked first in the DEX market, the trading volume of Uniswap is still only a fraction of that of the CEX giants. According to data from CoinmarketCap at the same time, Binance’s 24-hour trading volume was as high as $15.27 billion, followed by FTX’s 24-hour trading volume of $1.464 billion.

In the deep water area of ​​the bear market, the purely decentralized on-chain transaction volume is not as good as before. Uniswap began to think about its future and moved towards a comprehensive trading platform, which has become one of its choices.

As the developer behind Uniswap, Lader, COO of Uniswap Labs, revealed that the team is looking at several new products, and the latest product under development is the NFT trading business.

In June of this year, Uniswap Labs acquired the NFT aggregator Genie, which has already sent a signal to enter the NFT trading market. Today, Lader has made this move clear again, revealing that Uniswap will soon launch an NFT trading product, which allows users to buy and sell NFTs from many different markets in one stop.

The NFT aggregation trading business has been identified as an important channel for Uniswap to find growth points. “We are very excited about NFTs as a growth area that can bring more people into the crypto space and allow more people to exchange tokens,” Lader said. From a market structure perspective, Uniswap will help create a kind of New Experience.

Launch of Uniswap Diamond for Professional Traders

To challenge the CEX giants, Uniswap also realizes the importance of attracting professional traders and institutional users, who are the contributors to the huge trading volume of the crypto market.

Previously, the Uniswap community announced a grant program (UGP) to fund projects that benefit the growth of the ecosystem. On September 21, the Uniswap Foundation announced the whereabouts of the first wave of grants. Of that, roughly $1.6 million of the total $1.8 million in grants was used to fund a new protocol called “Uniswap Diamond.”

According to public information, the developer of Uniswap Diamond is GFX Labs, which was founded in 2021 by two professional crypto traders and developers. Of the 14 approved Uniswap governance proposals, 6 were proposed by GFX Labs.

According to reports, Uniswap Diamond will enhance the experience of professional traders and liquidity providers, simplify the development process and on-chain data analysis, and become the core infrastructure for developers and data analysts in the ecosystem. It will include APIs and SDKs for historical and real-time on-chain data, which will be a game-changer for developers, analysts and end-users built on Uniswap to easily incorporate real-time and historical Uniswap v3 data into integrations, applications program and analysis.

In addition, Diamond products include a professional version of the trading page, mainly for professional traders and liquidity providers. Its functions are similar to Coinbase Pro, and the experience is closer to traditional trading platforms, including trading markets, limit orders, and liquidity tools, aiming to increase Uniswap’s market share among professional users.

The Uniswap Foundation stated that the Uniswap Diamond professional interface will fill the gaps in the Uniswap ecosystem, providing a platform for professional and active traders and liquidity providers accustomed to the functions available on centralized exchanges, and traders will enjoy the benefits of off-chain exchanges. Many useful and familiar features, while maintaining the benefits of decentralization and on-chain, “We are excited about this ambitious plan”.

There are still challenges to catch up with CEX giants in the short term

During the bear market of encrypted assets, Uniswap’s series of actions showed its attitude of challenging CEX giants. However, in the short term, whether it is NFT trading business or services for professional traders, the status of CEX is difficult to shake.

The NFT market, regarded by Uniswap as an incision for transformation, has been deserted for a long time. NFTGo data shows that in recent months, the daily transaction volume of the NFT market has been shrinking. Recently, this data has only hovered around US$15 million, which has shrunk by more than 95% compared with the daily transaction volume of more than US$300 million in the peak period.

Uniswap incarnate aggregation platform to challenge CEX giants

The recent NFT transaction volume is very sluggish

In such an environment, the frequency of new NFT projects is reduced, and users also lack sufficient motivation to participate in NFT investment. Due to the poor liquidity of this market, the trading frequency of NFTs is not high, and the recent trading volume has remained sluggish. Some people in the industry believe that the decline in NFT value and the reduction in transaction volume are typical manifestations of bubble bursting. The market is pessimistic, and it is difficult for the new NFT trading business on Uniswap to bring large-scale data growth to it.

Uniswap also has shortcomings in attracting professional traders and institutions. On the one hand, professional traders are more concerned about the security of funds, and the frequent security incidents in DeFi are likely to make them stop at the door of Uniswap. In addition, whether Uniswap Diamond’s trading depth and trading functions can meet the needs of professional institutions also need to be considered, and their full migration to Uniswap may require a long verification process.

Industry insiders believe that there is another important reason why Uniswap is difficult to surpass platforms such as Binance, that is, it currently does not have financial derivatives business for hedging risks such as futures contracts and options contracts of encrypted assets.

Contract trading has always been regarded as a high profit area by centralized trading platforms, and it has almost become the standard of CEX. On the one hand, futures contracts can be traded with leverage, which can expand user positions and increase trading volume; on the other hand, using contract products, traders can short assets in bear markets to hedge risks or capture profits.

Judging from the historical laws of the market, in the bear market cycle, investors’ demand for spot trading is significantly reduced, while the impact on contract business is relatively limited. Therefore, Uniswap, which does not provide financial derivatives trading, is difficult to match the CEX giants in terms of trading volume.

Uniswap still faces many challenges if it wants to steal market share from CEX in the short term. However, if you look at the beginning of the story, Uniswap was not well known to the crypto industry until 2020, and it has robbed a large number of users and trading volume from CEX in just two years, which is a good result for it. Uniswap’s practice of iterating the DeFi core “Automated Market Maker” (AMM) model in V3 products is the most powerful guarantee that it can tell the story of “aggregate trading applications”.

Changpeng Zhao, CEO of Binance, has predicted that decentralized exchanges are expected to eventually surpass their centralized counterparts in the next five to ten years. If the predictions come true, Uniswap is still the one most likely to stand on the top. From the automatic market maker trading application that initially harvested traffic with “small and beautiful”, to the incarnation of a comprehensive trading platform, Uniswap may be able to create a bright spot in the next market peak.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/uniswap-incarnate-aggregation-platform-to-challenge-cex-giants/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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