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State of adoption in DEX (P.10)

  A powerful incentive of AMM-based DEX for liquidity provision The results from analyzing the operation of Uniswap V2 and V3 reveal answers to the research question. In most circumstances, exchange operators have a motivation to attempt to and enhance the observed volume on a certain exchange. Increased volume indicates increased liquidity and trust, which will attract more people. This motivation may differ for completely decentralized exchanges, but it is a significant aspect to consider for most existing ones. According to the previous section, V3 market is extremely active when gradually occupying the market share of its predecessor, especially recently when the number of users participating as traders in both versions has become equal. Although the number of pairs made on V3 cannot be compared with a huge variety of pairs on V2, it does not affect the number of swaps executed on V3, particularly in May 2022. All these aspects are facilitating V3 to be an attractive market for...
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Uniswap V3 Polygon Breakdowns - State of adoption in DEX (P.9)

The Uniswap community approved the deployment of Uniswap V3 on Polygon in December 2021. Since then the number of swaps per day has been around 65,000  or less (Fig. 64). However in May 2022, this number has spiked, particularly on 11 May 2022, more than 174 thousand of swap was executed with $348.1m of trading volume (Fig. 65). The liquidity providers reaped about $245k of fee (Fig. 66) and Uniswap V3 Polygon gained $240k revenue (Fig.67) at the same time. It was the time when V3 Polygon achieved the most profit ever. Compared with V3 on Ethereum, the popularity of V3 Polygon is still restricted. On the same day, the traded volume of V3 Ethereum was $544m, and a $1.63m fee was generated for LPs. It can be seen that only 1.56 times higher trading volume brought 6.65 times higher LP’s fee in V3 Ethereum. Looking at the Polygon price per trade, except for several days in Jan 2022 with a higher gas fee of more than $0.7 per swap, each transaction on V3 Polygon just costs about $0.115 ...

Uniswap V3 Breakdowns - State of adoption in DEX (P.8)

  On 23 March 2021, Uniswap team announced the details of their upcoming V3 release but it officially launched on 5 May 2021.  As a result, all analysis of Uniswap V3 would take place from May 2021 onwards.  Fig. 47.  Number of market supported on Uniswap V3 A day after its launch, about 280 new pools were formed in which the 0.3%-fee market had 151 pools because users were becoming accustomed to the general fee of the previous version. Besides, users also created many new pools in the 1%-fee market with 99 new pools. Other lower fee tiers were not of favor to liquidity providers, 0.05%-fee market has only 31 new ones, while no pool was in 0.01%-fee market. Up to now, the number of pools created on V3 has been fairly limited, averaging only about 2 to 20 pools established daily (Fig. 47). It is insignificant when compared to V2.  Fig. 48. Daily positions created in Uniswap V3 in May 2022 In May 2022, on average, more than 300 positions were generated every day;...