The decentralized finance [DeFi] realm has taken a back seat after an impressive streak. DeFi’s darling, Uniswap for instance was struggling to retain its position as the world’s largest decentralized exchange [DEX]. This was evident from its abrupt drop in terms of the total value locked [USD] in the protocol.
Since registering $2.71 billion on the 17th of November to drastically falling by more than 5% as the TVL figures dropped to $1.19 billion just two days later, trouble seemed to have been brewing for Uniswap.
Meanwhile, its vampire clone SushiSwap has significantly increased its TVL and is aggressively pursuing additional liquidity as revealed in the latest insights published by blockchain analytic platform Santiment. On the 17th of November, SushiSwap’s TVL rose from $406.7 million and $1.052 billion in a period of less than 48 hours posting an increase of nearly 160%.
In an interesting turn of events, Uniswap’s fall and its rival’s rise coincided with the conclusion of its UNI liquidity rewards program on the same day.
As Uniswap’s liquidity took a massive hit, the UNI token holders have commenced the process of voting for a new governance proposal that aimed to reestablish rewards in the form of the native UNI tokens for liquidity providers.
Uniswap-SushiSwap Battle Goes On
Advanced by Audius’ Strategy Lead, Cooper Turley, this proposal essentially seeks to cuts the amount of UNI rewards in half compared to the earlier program. With this, the new proposal would see 1.25 million UNI allocated to each pool monthly for a period of two months that corresponds to 10 million UNI tokens total, which in turn makes up for approximately 4.6% of the native token’s current circulating supply.
This essentially depicted that Sushiswap has once again extracted Uniswap’s liquidity yet again. Liquidity providers [LPs] from the latter jumped ship after the native token’s liquidity mining rewards ended and are moving to Sushiswap for SUSHI rewards.
Previously, the four pairs on Uniswap, which were DAI-ETH, USDT-ETH, USDC-ETH, and WBTC-ETH basically grabbed the fees from the AMM desk and UNI token rewards. However, following the conclusion of the incentives, LPs exited the ecosystem in search of more profits. Taking an advantage of which, Sushiswap announced liquidity mining rewards just a day before Uniswap’s expiry.