1. Is UniswapX a paradigm innovation?
2. Which roles are affected by the launch of UniswapX?
3. DEX track development narrative and competition dimension
1. Is UniswapX a paradigm innovation?
Previously, a blogger mentioned that the launch of UniswapX can be called a paradigm innovation. However, this statement is not quite appropriate.
Because those who have some understanding of the aggregator track will know that the product logic in UniswapX is almost the same as the product that @CoWSwap has already implemented, except for cross-chain transactions.
(UniswapX’s cross-chain trading function is not yet available)
So it is not difficult to understand why @CoWSwap official account and many DeFi KOLs on CT tweeted to mock @Uniswap.
Regarding the trend of combining on-chain and off-chain liquidity, I also predicted it in the "On-Chain Liquidity" research report more than a year ago.
So the conclusion of the first question: UniswapX is not a “paradigm innovation”.
At the same time, the "innovative" statements of relevant officials have also aroused the disgust of relevant project parties and practitioners in the DeFi industry.
2. What roles are affected by the launch of UniswapX?
a. Trader (Benefits)
The biggest beneficiaries of the launch of UniswapX are definitely traders, who can obtain better transaction prices (off-chain market maker quotes compete with on-chain AMM prices) and MEV protection through UniswapX.
b. Uniswap LP (damaged)
Before the launch of UniswapX, there were several sources of trading volume that Uniswap AMM could capture.
1. Retail trading on Uniswap frontend
2. Transactions imported by other aggregators
3. Non-active trading parties such as MEV bots based on Uniswap AMM
The transaction fees generated by these trading volumes are the source of profit for Uniswap LP.
But after UniswapX was launched:
1. Part of the direct transactions on the Uniswap front end will be eaten up by the market makers connected to UniswapX.
2. It may attract some users from other aggregators to trade on UniswapX, but it will not essentially increase the transaction volume of Uniswap AMM, because the previous aggregators will also aggregate their liquidity.
3. The design of anti-MEV bot may cause this part of the transaction to decline. (Subsequent data verification is required)
Therefore, the logical deduction result is:
The transaction volume generated by Uniswap AMM decreases => LP’s income decreases => LP TVL decreases => AMM liquidity deteriorates => The transaction volume generated by Uniswap AMM decreases
(ps: The legendary death spiral?)
c. Other aggregators and (unlaunched) cross-chain trading platforms
Since they are direct competitors, they will definitely be impacted by Uniswap’s strong brand power. I will not go into details here.
3. DEX track development narrative and competition dimension
Because this topic can be explored in depth and a research report of tens of thousands of words can be written, in this long push, I will only write some core views and projects. The logic and data discussion can only be written in detail later when there is time.
The current competitive dimensions and narratives of several mainstream DEXs
A. Innovation based on Uniswap V3
a. @izumi_Finance's DLAMM supports pure on-chain order book transactions based on centralized liquidity AMM. b. @traderjoe_xyz's simplified version of LiquidityBook and liquidity mining ecosystem based on DLAMM.
c. @mavprotocol makes model innovations on the LP side based on UniV3 to serve passive LPs in specific scenarios.
B. Innovation based on token economics
a. Curve ecosystem is a complete set of DeFi nesting dolls and bribery projects based on the ve model.
b. DEX projects based on the ve(3,3) model after Solidly, the current leader is OP's @VelodromeFi
C. Aggregators and cross-chain trading DEX
The above three DEX tracks are relatively mature, and it is difficult for us to see major innovations within these frameworks. Therefore, we should pay more attention to some emerging DEX narratives.
A. Uniswap V4 and @ambient_finance
The core design of Uniswap V4 is not the Hook, but the more basic Accounting Model. This logic can change the core design of all underlying AMM smart contracts.
B. crvUSD, combining the dynamic liquidation of crvUSD with traders can achieve negative transaction fees.
C. Upgraded versions of other blue chip DeFi projects (welcome to add) such as @synthetix_io V3
D. Perp DEX based on the GMX model can bring larger volumes of foreign exchange, commodities, stock transactions, etc. to the chain.