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Selling pressure relieved? The first batch of liquidity mining is about to end, Uniswap calls for a community meeting to discuss the next steps

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Selling pressure relieved? The first batch of liquidity mining is about to end, Uniswap calls for a community meeting to discuss the next steps

After experiencing a significant drop in September, most mainstream DeFi tokens have shown signs of recovery recently. Uniswap, the leading DeFi project with $3 billion locked in funds, is no exception. Apart from a recent surge in its token price, the official team is also planning to hold a community meeting to discuss the next steps post the end of liquidity mining on November 17th.

According to the official announcement by Uniswap, the community meeting is scheduled to take place at 1:00 AM Taiwan time on November 13th. The agenda includes discussions on governance process adjustments, revisions to liquidity mining, and the cUNI proposal on Compound.

Issuance of Governance Token Protects Throne

Previously, when liquidity mining reached its peak, many competitors extracted most of its liquidity through "vampire mining attacks" by copying the Uniswap protocol code, including the highly controversial, anonymously developed SushiSwap and DeFi Swap launched by Crypto.com, both of which were based on the Uniswap protocol.

After SushiSwap absorbed a large amount of liquidity, Uniswap issued the governance token UNI in mid-September, initiating liquidity mining and an airdrop program, causing a large number of users to claim UNI tokens, which temporarily led to a surge in Gas Fees but also solidified Uniswap's position in DeFi.

Community Focus on the Future of Liquidity Mining

Uniswap's liquidity mining will end on November 17, and the community meeting on the 13th will focus on whether to continue liquidity mining or implement other modifications. The issuance plan targeted the following four pools:

  • ETH/USDT
  • ETH/USDC
  • ETH/DAI
  • ETH/WBTC

Each pool will provide 5 million UNI, equivalent to approximately 83,333.33 UNI per day.

The issuance of UNI came towards the end of the DeFi craze, but the market's FOMO sentiment still drove the price from around $3 to a historic high of nearly $8. Many community members believe that the airdrop and liquidity mining secured Uniswap's dominance but also put selling pressure on UNI. UNI has been declining since September 19, reaching a new low of $1.8 on November 5.

Impact on UNI Price

With mining rewards possibly ending, trader @Tetranode claims this is a big positive for the UNI token, believing that the relief of selling pressure will allow UNI to soar again.

Venture capital firm DeFiance Capital member Wangarian expressed a different view on Twitter. While he agrees that UNI's relief of selling pressure is positive, he believes that Ethereum may fall as a result. He stated:

When Uniswap launched liquidity mining, Ethereum rose from around $365 to $389. Currently, around $2.3 billion is provided as liquidity on Uniswap, representing about 1.1 billion ETH locked in. As mining ends, some of the ETH will flow out, impacting the market.

However, the previous rise in Ethereum may have been due to users urgently buying to cope with the surge in Gas Fees to claim UNI tokens. Additionally, the end of liquidity mining will allow users to better understand the actual locked value of Uniswap, rather than the book value driven by UNI mining incentives.

Overall, whether liquidity mining will end remains unknown. The initial mining released only 5 million UNI tokens, and there are 167 million UNI community funds to be distributed in the first year. The community will gradually decide on the allocation of funds through governance proposals, which may include donating to developers or adding liquidity pools.