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 (Fig.68), quite more economical than on Ethereum. As such, the use of the Polygon network does its primary role in minimizing execution costs.
Fig. 64 Swap count and the number of users on Uniswap v3 Polygon
Fig. 65 Trading volume of Uniswap V3 Polygon
Fig. 66 Liquidity provider fee generated on Uniswap V3 Polygon
Fig. 67. Total revenue of Uniswap V3 Polygon
Fig. 68. Gas price per transaction on Uniswap V3 Polygon
Tab. 3. Top market on Polygon Uniswap V3 in the last 90 days (from 5 March to 5 Jun 2022)
USDC/WETH is the most popular trading pair up to now, but in Uniswap V3 on both Ethereum and Polygon, the fee tier 0.05% is used the most. My data parameter applied to the 90 days range for most token pairs showed that the second highest market is for the pair of MATIC/USDC since MATIC is the native token of the Polygon chain with a $1.67b trading volume. In the top five markets on V3 Polygon, there is no fee tier of 0.3%, even though since the beginning of its release, most new markets were created using this fee tier (Fig. 69). Polygon V3’s liquidity is accumulating more. On the launch day, only $180k was funded for a liquidity campaign, and four months later, V3 Polygon captained about $112.12m of liquidity, 622 times higher than before (Fig. 70). Breaking down into fee tier, most liquidity of V3 Polygon concentrated on 0.05% fee tier (Fig. 71).
As of 5 June 2022, about $82m of total value is locked in Uniswap V3 Polygon in which 81.3% of the TVL is for the fee-tier of 0.05% , 21.1% of TVL is for a 0.3% fee and 12.2 % for a 0.1% fee (Fig. 72). Due to its contribution, the liquidity providers get the most return on the fee-tier 0.05% (Fig. 73). Taking the top market of USDC/WETH with the 0.05% fee as an example, so far, the investors have gained 26.25% of cumulative yield (Fig.74).
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