Uniswap V3 Growth on Polygon
Uniswap, the ever popular decentralized exchange, deployed to the Polygon network in Dec 2021. The significance of this release is the combination of the most popular decentralized exchange, Uniswap, now on the most popular sidechain in the Ethereum ecosystem, Polygon.
The promise of the Polygon POS network is lower gas fees, which at the time of writing on the Ethereum network are $44 for a Uniswap trade.
Since the release, the liquidity has poured in. Uniswap currently holds over $70M in liquidity.
This liquidity exists across over 1,500 different trading pairs.
The Uniswap trading pools have a 3 tiered fee structures (0.05%, 0.30%, and 1%) This fee is collected from the traders and distributed to liquidity providers. The liquidity providers must decide which pool to deploy their assets to and currently 64% are choosing the lowest fee tier, 0.05%.
Even using the lowest fee tier , Uniswap has already collected over $4M in revenue.
This revenue is the direct result of the massive Trading Volume seen on Polygon. In two months, Uniswap has already captured over $4B in trading volume.
It’s not only the revenue that keeps the liquidity growing, it is also the incredible capital efficiency (how much trading can occur across available liquidity) offered by Uniswap V3 that is unparalleled on Polygon. On an average day liquidity providers are enjoying a sweet 1.5 capital efficiency ratio.
To date, over 50K unique wallets have interacted with Uniswap on Polygon. This number is growing consistently with no sign of slowing.
As for that promise of lower gas fees, Polygon has spoken. The average cost to swap since inception is a mere $0.18 per trade.
Congratulations to the Uniswap and Polygon teams on a successful marriage, and surely a milestone for the Ethereum community.