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Uniswap’s liquidity drops by 50% and the UNI price could follow

  • Uniswap has seen a massive outflow of liquidity.
  • The liquidity mining program is still running out today.
  • UNI / USD technical data and on-chain data send mixed signals.

The largest decentralized cryptocurrency exchange Uniswap lost its lead. According to DeFi Pulse, the platform now ranks third with a total value of $ 1.6 billion.

Users have depleted almost half of Uniswap’s liquidity in less than 24 hours as the Liquidity Mining rewards program is about to expire on November 17th at 12:00 PM UTC.

Uniswap Chart, DeFi Pulse

The graph above shows that liquidity was $ 3.06 on November 14th and decreased over the weekend. The sharpest decline was seen on Tuesday, November 17, in the early Asian hours, with the SushiSwap and Bancor logs being the main beneficiaries. Both protocols saw a massive inflow of liquidity (60% and 40%, respectively).

UNI’s liquidity run is coming to an end

Uniswap launched its liquidity mining rewards program in September together with the local token UNI. However, the plan expired on November 17 at 12 p.m. UTC.

The team stated in the blog post:

After 30 days, the governance will reach its vesting cliff and the Uniswap governance will control all UNIs that have been entrusted to the Uniswap treasury. At this point, governance can vote to provide UNI for grants, strategic partnerships, governance initiatives, additional liquidity mining pools, and other programs.

As explained at this point in time, four pools were initially sown: ETH / USDT, ETH / USDC, ETH / DAI and ETH / WBTC. The pools were allocated around 20 million UNI, each of which received 5 million tokens apiece.

Uniswap has created four pools, ETH / USDT, ETH / USDC, ETH / DAI and ETH / WBTC, and allocated 20 million UNI tokens to them. Meanwhile, yield farmers have poured over $ 2 million into the pools and are now ready to take their money back.

The growing popularity of SushiSwap and other competing protocols confirms the theory that the community is migrating to new lucrative areas in order to continue to deplete liquidity after the Uniswap program completes.

Uniswap votes on the program renewal

The Uniswap team has launched a survey to determine what will happen to the pools once the mining ends, given the massive cash outflow. Cooper Turley and another community member named Monet Supply asked the community if they should provide UNI liquidity to farmers.

They explained the advantages and disadvantages of distributing UNI tokens to liquidity providers. They suggested assigning UNI to the same four pools for an additional two months, reducing the rate of congenital distribution.

Distribute UNI for an additional two months from the time this proposal is adopted and executed by governance. Distribute to the same four pools, but at half the rate of the recovery distribution. This equates to 1.25 million UNI per month for each of the four pools covered (WBTC / ETH, USDC / ETH, USDT / ETH, DAI / ETH), which equates to a total of 5 million UNI per month or 10 million UNI in the next two months .

At the time of writing, 58% of owners were voting for the proposal and 41% were against. The poll ends on November 19th at 11 p.m. UTC.

UNI charts send mixed signals

In the meantime, UNI managed to make up for the losses incurred earlier in the week. At the time of writing, UNI / USD is changing hands at $ 3.6 from Monday’s low of $ 3.2.

In addition, the TD Sequential indicator recently printed a buy signal in the form of a red nine candlestick on UNI’s 4 hour chart. The bullish pattern suggests that the price of one to four daily candlesticks could rise. If the demand is strong enough, the token will start a new countdown to the top with the next focus on $ 4.0 and $ 4.2.

UNI / USD, 12-hour chart

UNI / USD, 12-hour chart

IntoTheBlocks IOMAP shows Uniswap faces strong resistance ahead of $ 4. Around 6,000 addresses had previously bought almost 58 million UNI between $ 3.67 and $ 4.

IOMAP data, UNI

IOMAP data from UNI

Such a massive supply barrier could slow the upward momentum. Thus, just a 4 hour candlestick closing above USD 4 will confirm the bullish scenario and lead to further gains. Otherwise, Uniswap may continue the decline towards the USD 3.2 support level.

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