Uniswap regains momentum by eclipsing the $3 billion mark

Uniswap has seemingly gotten back on track after eclipsing $3 billion in liquidity for the first time since November

The decentralised on-chain protocol currently has a liquidity of $3.21 billion according to Uniswap’s official stats. It started showing signs of hitting $3 billion at the start of the week and surpassed the mark yesterday. The trading volume sits at $655.3 million — up 21% in the last 24 hours.

Uniswap’s total liquidity. Source: Uniswap

The last time Uniswap touched such a high was in November last year before plunging after farming ended.  It was the world’s leading DeFi project then and the first ever to have a total value locked exceeding $3 billion. Its liquidity at the time translated to a market dominance of 23.22%.

Uniswap started haemorrhaging value as the end of farming neared without any solid guide and clarification. The protocol bled most of the value it had gained in the months before. The outlook is much different now.

While it is still the top DEX but overall, it trails overall behind the lending protocols Maker and Aave. It is worth noting that Uniswap has achieved this milestone without any active incentive programs. The decentralised exchange is said to be in the process of constructing new incentives.

Two members of the protocol’s community Coopahtroopa and MonetSupply, put forward a proposal regarding the future incentive program. According to their proposal, the monthly incentive allocation will be dwarfed by half from 10 million to 5 million UNI. This will then be distributed across four different pools in varying proportions.

WBTC/ETH would have the highest allocation i.e. 1.67M UNI/month followed by USDC/ETH and USDT/ETH – both at 1.25M UNI/month. The last pool DAI/ETH will have an allocation of 0.83M UNI/month. The proposal is, however, yet to see any further progress since passing the first two approval phases.

It is not clear why it was stalled or if it will be revisited and submitted as a formal governance proposal now that Uniswap’s liquidity is surging. Users await the much-anticipated Uniswap V3. The only other major event around the DEX is the Uniswap Grants Program that was officially launched at the end of December. Interestingly, the program is the first governance proposal to meet the quorum criterion and get approved.