Ethereum DEX Protocol Uniswap Surpasses $1 Million in Fees for Liquidity Providers

By December 16, 2019 Ethereum
Click here to view original web page at sludgefeed.com
Binance

Uniswap, an Ethereum (ETH) protocol for decentralized and automated token trading, surpassed $1 million in fees for liquidity providers on December 11.

As originally pointed out on Twitter by Crypto Fruit, Uniswap’s usage began to pick up in March of this year, taking roughly 9 months to reach the $1 million fee milestone. The protocol currently averages around $5-10K in daily trading volume.

Uniswap collected fees
Total fees for liquidity providers on Uniswap (USD) (Dune Analytics)

Uniswap leverages a series of ETH-ERC20 exchange contracts, which can be created for any token using what is called the “Uniswap factory contract.” These exchange contracts hold reserves of both ETH and the associated ERC-20 token, allowing anyone to become a liquidity provider and earn fees by contributing assets.

“Liquidity is pooled across all providers and an internal “pool token” (ERC20) is used to track each provider’s relative contribution,” states the Uniswap team in its whitepaper. “Pool tokens are minted when liquidity is deposited into the system and can be burned at any time to withdraw a proportional share of the reserves.”

The current fee for executing a Uniswap contract and swapping between ETH and an ERC-20 token stands at 0.3%. Notably, this fee is fully split between liquidity providers proportional to their reserve contribution.

The swap UI (Uniswap)

Ultimately, this means all of the $1 million in fees have been paid out to users that are providing liquidity for the exchange.

In addition to the fee milestone, Uniswap is now also seeing record amounts of capital locked in its contracts. According to data from DeFi Pulse, the total value locked in Uniswap contracts currently stands at $25.7 million.

Total USD locked in Uniswap contracts (

Uniswap raised more than $1 million in a seed round back in April, led by crypto hedge fund Paradigm.

Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.

Voyager

As originally pointed out on […]

Leave a Reply