All the data in the below post can be found on this Dune Analytics dashboard.
Stable coins are a critical part of decentralized finance on Ethereum.
Stable coins allow individuals to capture value at a fixed amount without the risk of fluctuating prices.
If you are interested in learning more about the different stable coin options, and why stable coins are important, the Ethereum foundation covers this topic in full here.
Uniswap has always offered users a platform to swap between different stable coins but usage was low until the release of Uniswap V3.
V3 now accounts for 92% of the total Uniswap stable coin trading volume.
While the growth of stable coin trading has expanded in Uniswap V3, it is important to understand that it only represents a small portion of the overall TVL, trading volume, and revenue generated compared to other non-stable pools. Stable coin pools account for 28% of TVL, 14% of daily trading volume, and just over 5% of daily revenue generated.
In September 2021, a proposal was put before the community to introduce a 1 basis point (BP, 0.01%) fee tier to “help Uniswap compete in stablecoin <> stablecoin pairs, where the majority of the market share is taken by Curve and DODO”. The proposal was passed by governance and on November 13th, 2021 the 1 BP fee tier was released.
Since the release, the 1 BP is showing significant growth across all metrics in stable coin pairs on Uniswap V3.
Among stable coin pools, 1 BP pools already account for 86% of daily trading volume, and are nearing 50% of TVL and daily revenue. The signs are clear that 0.01% pools are gaining in popularity and are soon to dominate stable coin trading on Uniswap.
So how did the 1 BP pools perform in terms of Uniswap’s competitiveness amongst other platforms? The data indicates that it was very successful.
Prior to the release of 1 BP pools, Uniswap was capturing anywhere between 16–30% of daily overall stable coin trading volume. After 1 BP pools, Uniswap is now capturing 45–80% of daily stable trading volume.
Uniswap has clearly expanded it’s reach into the stable coin trading space with the release of V3 and even further with the introduction of the 1 BP fee tier. While stable coin trading remains a smaller part of the overall protocols use, it is impressive to see Uniswap notch another feather in their caps.
Thanks for reading. If you have any questions about the data or analyses, please reach out to me on Twitter @mtitus6.