Uniswap Monthly Financial Report & Analysis - Dec 22
This Newsletter issue covers Uniswap DAO & Protocol Performance during Dec 22.
Table of Contents
Governance Recap
The discussion among community members on the forum centered around three main topics :
Community Governance Process Update : On December 21st, a successful off chain vote on Snapshot initiated by the Uniswap Foundation updated the community governance process to three steps : Request for Comment on the Forum, Temperature Check on Snapshot then an on chain Governance vote.
Optimism Liquidity Mining Phase 2 : The community discussed how to allocate the second portion of the OP granted to Uniswap Protocol.
Fee Switch Pilot : The community continued its discussion around the fee switch pilot that is designed to test the impact of a portion of trading fees going to Uniswap DAO instead of Liquidity Providers.
Uniswap governance executed one vote On chain during December, to fix an issue with how protocol upgrades get deployed on Arbitrum.
Crypto Markets & UNI Price Recap
Crypto prices continued their calm that started in the second half of November as markets took a breath after major volatility between Nov 6th & 10th..
BTC started December at 17.2k and ended the month at 16.5k recording a monthly decline of 3.6%.
ETH started the month at 1.3k and closed at 1.2k, a 7.6% monthly decline.
UNI had a 12% monthly decline with a monthly open of 5.9 and a close of 5.2 USD.
Since Uniswap’s business model is directly affected by market volatility, the calm markets had a direct effect on the protocol’s metrics.
Volume Analysis
Data Source : Uniswap Extractor & Flipside
Uniswap protocol facilitated 20B USD in trading volume during December, down 59% MoM.
16B (80%) came from Uniswap v3 - Ethereum.
1B (5%) came from Uniswap v2.
3B (15%) was executed through Uniswap on L2s.
Data Source : Uniswap Extractor & Flipside
Uniswap recorded its lowest monthly trading volume during December. Trading volume has been trending lower since the start of the year except for May & November, two turbulent months in crypto history.
Uniswap on L2s has been facilitating more trading volume than Uniswap v2 since July.
Data Source : Uniswap Extractor & Flipside
Uniswap on L2s is growing, it went from 2.6% share of Uniswap protocol trading volume during Dec 21 to 15% during Dec 22.
The share of L2s has been trending higher since the start of the year with a stagnation during Q4.
Fees Analysis
Data Source : Uniswap Extractor & Flipside
Liquidity Providers (LPs) on Uniswap made 20m USD in fees during December, down 62% MoM.
At December levels, LPs are making an average APR of 7% on their liquidity.
Data Source : Uniswap Extractor & Flipside
Similar to volume, monthly fees generated by LPs recorded their low for 2022 during December. Although L2s are facilitating more volume than v2, the OG deployment is still generating the same amount of fees to LPs as L2s.
Data Source : Uniswap Extractor & Flipside
As with volume, fees generated by L2s have been growing for the last year. L2s share of fees paid to LPs went from 1.6% during Dec 21 to 16% during Dec 22.
Liquidity Analysis
Data Source : Defi Llama
Monthly Liquidity is computed as the average daily TVL sourced from Defi Llama.
As of Dec 22, 3.4B USD is provided by LPs on Uniswap down 11% MoM.
Arbitrum had an 18% increase in liquidity provided during the month. Winds of an incoming ARB airdrop?
Data Source : Defi Llama
L2s contribution to the protocol’s liquidity is still small but had been relatively stable in USD terms during 2022 despite the bear market.
Data Source : Defi Llama
Liquidity on L2s is also growing but their contribution to the protocol’s total liquidity is still small compared to their share of volume & fees. L2s share of Uniswap protocol liquidity went from 1% during Dec 21 to 6% during Dec 22.
Treasury Analysis
Data Source : Dune Analytics
As of the end of Dec 22, Uniswap DAO was controlling 1.6B USD liquid treasury (all in UNI) and 422m UNI still vesting. In total, the DAO has a whopping 2.1B USD to deploy as the community sees fit. Buying Uniswap NFT Aggregator from Uniswap Labs in the works?
No treasury expenses were executed through governance during December.
December Special : Full Year Recap
Data Source : Uniswap Extractor & Flipside
Uniswap protocol facilitated 570B USD in trading volume during 2022, and generated 800m USD in Fees for the protocol LPs.
Traders paid an average 14 bps fee per trade.
81.8% of trading volume came from v3 - Ethereum, 9.5% from L2s and 8.7% from v2. L2s facilitated more than v2!
Focus : Top Tier Assets Direct Trades on Uniswap v3 - Ethereum
Data Source : FlipsideCrypto
Top Tier assets are : USDT, USDC, DAI, ETH and wBTC and trades are considered direct when executed through the pair pools, without multi routing. For example, a direct trade would be sending USDC to a USDC/USDT pool and getting back USDT. A multi route trade would be sending USDC to a USDC/Frax pool, getting back Frax then swapping it to USDT.
Direct trades between top tier assets had been contributing around 80% of Uniswap v3 on Ethereum monthly trading volume during 2022, even reaching a max of 96% during June.
ETH/USDC is the flagship pair of Uniswap. The pair pools had been contributing around 50% of Uniswap v3 on Ethereum monthly trading volume during 2022.