Rise of DeFi wars? Uniswap's UNI token airdrop starts a crypto rivalry

Published on by Cointele | Published on

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Uniswap's new UNI token has created a buzz in the DeFi world, with over 13,000 users claiming their tokens within three hours of its launch.

On the same day that UNI launched, it was listed on more than a dozen exchanges, with Binance being one of the first, listing the token within 90 minutes of its launch, which drove the trading volume to $1.9 billion.

Token issuance has led Uniswap to become the biggest platform by total value locked, currently holding $1.91 billion.

UNI is not just a response to SUSHI. Although at the outset it seemed like Uniswap launching its token was a direct response to SushiSwap's vampire mining attack, it could also be a strategic move to cash in on the hype around liquidity mining.

"It's hard to avoid the conclusion that the launch of UNI is in reaction to not just SUSHI's vampiric activities, but also the frenzy surrounding liquidity mining. As Uniswap has stated, this 'governance' token will not govern anything related to Uniswap's actual day-to-day function, except the emission of UNI itself to AMMs, meaning that its real function is to create an inflationary asset."

The common consensus in the community is that Uniswap is one of the major foundational DeFi projects, while SushiSwap is seen by some as a high-risk project, considering that the previous head, Chef Nomi, dumped the tokens that were part of the developer pool days before the Uniswap migration and faced allegations of it being an exit scam.

Uniswap is seen as a more stable project within the DeFi community; thus, a price correction hasn't seemed to deter investors from the UNI tokens.

As Bankman-Fried suggested, there are several ways of attracting liquidity to a DeFi platform, but holding on to this liquidity may prove to be the biggest challenge, as was evident with the migration of funds back to Uniswap after the UNI token launch.

"They always can attract some liquidity with high APY for yield farming. However, the real yield for liquidity providers comes from the trading volume, so Uniswap is far ahead from SushiSwap. It is a matter of time when liquidity will come back to Uniswap. Sushi might attract liquidity for a long tail of tokens that plan to launch soon. This will bring more volume to their protocol."Beginning of the DeFi wars?

The rivalry between Uniswap and SushiSwap could be seen as one of the first instances of DeFi platforms battling among themselves for liquidity and, in turn, investors' attention.

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