Uniswap’s Liquidity Falls 48% as UNI Rewards Set For Halving

Marking the end of Uniswap’s initial liquidity mining program is the massive withdrawal of liquidity from the largest Ethereum-based decentralized exchange.

A 48% Drop

Data from Defi Pulse–a DeFi tracker, on Nov 17, reveals a high outflow of liquidity from the DEXs. At the time of writing, the Total Value Locked (TVL), a term used to describe the number of assets being managed at any point of time by a DeFi dApp, is down roughly 48 percent.

From $3 billion of early last week, the amount of assets in Uniswap now stands at $1.54 billion, a 48 percent drawdown. The migration shows the presence of opportunists keen more on receiving the UNI governance token and a share of swapping fees more than seeing the dApp succeed.

The End of the First UNI Distribution Regime

The initial liquidity mining program ended earlier today, at midnight UTC, signaling the complete distribution of 20 million UNI tokens to four initial pools. Earned tokens weren’t subject to vesting. 

Official distribution started a days after Uniswap launched UNI, a governance token and an incentive following the leeching effects of other protocols, like Sushiswap. Competitors not only had a governance token as a shield against impermanent loss but attracted users to stake their Uniswap’s LP tokens for high APRs.

According to the Uniswap, after today, all UNI under the treasury will be under the community—although its governance had been live since launch. Token holders can decide to allocate UNI held at the treasury towards grants, strategic partnerships, governance initiatives, or even in adding more liquidity programs.

Voting on a New Proposal

Already, voting is in progress for a new governance proposal that will see liquidity providers receive UNI as rewards. 

Even so, the proposal is to halve the number of UNI tokens distributed per pool for the next two months. Instead of 5 million UNI tokens per pool as before, each of the four pools will be allocated 2.5 million UNI tokens.

The snapshot pool is live for the next three days. A minimum of 25,000 yes-votes is needed for the proposal to pass. If it finds support, it will proceed to the consensus check phase where 50,000 yes-votes will be required. After that 40 million affirmative votes will be needed for implementation.

Last Month, BTCManager reported IOST’s launch of Watermelon, a DeFi protocol combining aspects of Uniswap and Maker.

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