Unichain Crosses $1 Billion in DEX Volume, Yet UNI Struggles Amidst Selling Pressure

In an incredible accomplishment, Unichain, the decentralized exchange (DEX) scaling solution, has pulled in over $1 billion in trading volume since its mainnet launch on February 11th.

This is a significant landmark for the project—${} billion seemingly clears the path for it not to be considered a Layer 2 solution for the Layer 1 Ethereum blockchain, but rather an actual scaling mechanism for Uniswap, one of the more effective decentralized exchange protocols in existence. But! Despite this success, Uniswap’s native token, UNI, has failed to respond positively and has recently been hit with some serious sell-offs.

Crossing $1 billion in total trading volume is no small feat for Unichain. Since its mainnet launch, it has significantly scaled Uniswap, the decentralized exchange famous for its lightning-fast speed and growing liquidity. The Layer 2 solution was built to scale not only Uniswap but also the entire DeFi space. This achievement highlights the increasing significance of Layer 2 solutions in optimizing existing blockchain platforms, as well as the reduced inefficiency and increased accessibility of the decentralized trading experience for average users.

Uniswap’s continued dominance in the decentralized exchange market is evident in the numbers. Currently, Uniswap leads the pack in daily trading volume, with a remarkable $22.759 billion in 7-day DEX volume. On a 24-hour basis, Uniswap’s volume stands at a solid $3.701 billion, reinforcing its position as one of the top platforms in the crypto space. With its market-leading trading volumes, Uniswap is attracting users and liquidity like no other platform, continuing to cement its role as a cornerstone of DeFi.

Even with investor excitement around Uniswap and the anticipated growth of Unichain, Uniswap’s native token, UNI, is experiencing some serious headwinds. Over the past month, UNI has dropped 33.66%, falling from $11.5 to its current price of $7.7. Even more alarming is the rate at which it’s dropped from its all-time high (ATH) of $44.97, reached in May 2021. Down 82% from that figure, in these last few months UNI is painting a pretty grim picture for DeFi tokens when it comes to volatility.

Worrying information from on-chain data has appeared for UNI holders. A considerable quantity of the token has been flowing from big wallet holders to exchanges. This has appeared to be the beginnings of a more extended selling period for the asset. Five hours ago, a total of 1.54 million UNI, worth approximately $11.17 million, was seen moving from a large institution, this time Galaxy Digital, a leading crypto investment firm, to the exchanges Binance and OKX. Over the course of roughly 12 days, approximately 8.871 million UNI has been moved to those two exchanges, along with a few million more sent to other exchanges or in the same direction but not mentioned here.

The outflow from wallets held by institutions has continued. These institutional wallets have been sending significant amounts of UNI to exchanges. This does not bode well for the long-term price of the token. Institutions, like Galaxy Digital, are significant players in the market. They set a lot of the market sentiment. Sending these amounts of UNI to exchanges surely sends a negative signal. Is the message ‘We are not optimistic about the price of UNI in the near future.’? If it is, and if other investors take the message as a cue to also start selling or to not buy, then more selling seems likely. And more selling means a lower price.

The recent market activities are a sobering reminder for UNI holders and investors of the volatility inherent in the crypto market, particularly when it comes to DeFi tokens. While Uniswap’s tech push through Unichain suggests a rosy future for the protocol, the price action of the token right now is wreaking havoc on the collective psyche of its holders, with many now beginning to question whether the fundamentals of Uniswap and its scaling solutions are enough to offset the market forces currently at play.

The benefits of the price struggles at UNI are largely negated by the success of Uniswap and Unichain. Uniswap continues to be one of the most successful DeFi projects. Its cumulative DEX volume of over $1 billion attests to that fact. The platform itself, and the scaling solution that it uses, Unichain, are as useful, usable, and efficient as any other part of the DeFi world. Uniswap, and by extension Unichain, strengthen their presence and positioning in the DeFi world daily.

Additionally, the current market circumstances could allow for beneficial long-term investment scenarios. As Uniswap’s own market value continues to slowly contract, certain industry observers are pointing out that this downturn could afford long-term investors some excellent entry points. If Uniswap’s token price, at the moment a little below $5, were to fall below its mid-July low of about $4.45, we could expect a nice trigger for some dip-buying activity. Even if the token price were to continue to stay below $5 for a meaningful period, this might also serve as a nice setup for some long-term invest-and-hold strategies.

The cryptocurrency market is still in the process of maturing, and so, too, are the projects that populate this nascent space. Focused on their own sets of problems to solve, the maturing projects are likely to bring a greater emphasis on concentration and profitability. For now, investors will be watching closely, as both Uniswap and its UNI token fluctuate through the challenges of a maturing market.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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