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Did selling UNI break your leg? Uniswap governance token surged over 100% in the past 24 hours.

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Did selling UNI break your leg? Uniswap governance token surged over 100% in the past 24 hours.

After the issuance of the governance token UNI by Uniswap, its price has been skyrocketing, ignoring market sell-off expectations, with a surge of over 100% in the past 24 hours. The increase in token price has also led to a rise in the total value of assets locked in the Uniswap platform.

Market Expects Strong UNI Dumping Pressure

Yesterday, Uniswap, the largest decentralized exchange on the Ethereum network, unexpectedly announced the distribution of its native token UNI by airdropping 400 UNI to every wallet address that had interacted with the Uniswap contract, totaling 150 million tokens, making almost every market participant a recipient. Some online users even joked:

"If you missed out on the UNI airdrop, you should reflect on yourself. What were you even trading during this DeFi craze if you didn't use Uniswap?"

However, due to the loose airdrop conditions (at the time of writing, there were still 59 million UNI tokens waiting to be claimed), many market participants believe that there will be a significant dumping pressure after the opening. Short-term price performance of UNI is not expected to be strong. The fact that users are willing to pay high Gas fees to withdraw their UNI tokens immediately is the best proof of this. Upon the launch of UNI yesterday, almost all major exchanges listed the token, driving a trading volume of 1.8 billion USD. Even the typically stringent Coinbase promptly announced support for UNI trading, pushing the token price to 4.5 USD before retracting to the range of 2.5 to 3 USD. The market generally believes that all the positive factors for UNI are already priced in, and coupled with the airdrop dumping, there may not be significant price increases in the short term.

UNI Ignoring Selling Pressure Soars

However, the market is always unpredictable. UNI surged from 3.37 USD in the early morning to a peak of 5.9 USD today, marking a 75% increase. Many users who received the airdrop but sold early are now regretting their decision. According to data from CoinGecko, UNI ranks 4th in trading volume among cryptocurrencies in the past 24 hours, surpassing top ten cryptocurrencies like BCH, XRP, and LINK. At the time of writing, UNI is priced at 5.2 USD with a circulating market cap of 337 million USD.

Price Surge Boosts Platform's Locked Value

Furthermore, as the price surges, the expected returns from Uniswap's upcoming liquidity mining continue to rise, attracting many liquidity providers to shift funds into Uniswap in preparation for liquidity mining. According to a UNI annualized return table compiled by Twitter user Benjamin Simon, if the total asset value in a single liquidity pool is 300 million USD and the UNI token price is 5 USD, the annualized return rate is approximately 50.69%.

According to DeFi Pulse's data, following the announcement of UNI liquidity mining incentives, Uniswap's Total Value Locked (TVL) increased by nearly 75% within 24 hours. Uniswap's TVL surged to the second-largest, with approximately 1.32 billion USD locked in assets.

What are the Negative Factors?

One of the co-founders of the well-known data website CoinMetrics pointed out that despite UNI's many advantages, there are still some negative factors:

  • Many whales made significant profits from this
  • Many scam projects profited heavily as liquidity providers
  • The planned four-year lockup period will release most tokens in about two years
  • Although predictable, the cost of claiming liquidity rewards is still unclear (Note: Testing was approximately 0.022 ETH at the time of submission)