Uniswap Deploys Unichain and Challenges the Competition on Ethereum

Uniswap takes a major new step with the launch of Unichain, its layer 2 blockchain on Ethereum. This announcement comes just days after the successful deployment of its version 4 across twelve major networks.

A strategic launch in the Ethereum Layer 2 ecosystem

Yesterday, February 11, Uniswap Labs officially launched Unichain, its layer 2 blockchain built on Ethereum. This new infrastructure promises impressive performance with block times of one second, providing users with a smoother and faster trading experience. More than just a simple exchange platform, Unichain also allows users to generate interest and borrow against collateral.

The economic aspect of Unichain is particularly interesting: the platform could generate nearly $500 million per year for Uniswap Labs and UNI token holders. These revenues would come from redirecting fees that would normally have been paid to Ethereum validators, thereby creating a new revenue model for the ecosystem.

This initiative takes place in a context where Ethereum overwhelmingly dominates the decentralized finance market, with $56.6 billion of total value locked, well ahead of Solana ($9.1 billion) and Bitcoin ($6.6 billion), according to data from DefiLlama.

A multifaceted expansion strategy in an evolving market

The launch of Unichain coincides with the recent deployment of the version 4 of Uniswap across twelve major blockchains. This new version, launched on January 31, introduces a significant innovation: the “hooks”, plugins that allow developers to customize their trading pairs. Already, about 800 developers have created 150 unique hooks, showcasing the appeal of this feature.

Unichain joins an already highly competitive Ethereum Layer 2 ecosystem, alongside established players like Base ($3.1 billion TVL), Arbitrum ($2.7 billion), and Polygon ($769 million). To stand out, Uniswap focuses on interoperability by developing EIP-7683 in collaboration with Across, a standard aimed at facilitating exchanges between different chains.

This expansion comes at a crucial time for Uniswap, which faces increased competition, notably from Raydium on Solana. The latter had even surpassed Uniswap in trading volume in early 2024, reaching $122 billion over 30 days, compared to $96 billion for Uniswap.

In summary, Uniswap’s dual strategy (the launch of Unichain and the deployment of version 4) demonstrates its desire to maintain its position as a leader in a constantly evolving DeFi market. With these innovations, Uniswap is equipping itself to meet the growing needs of users in terms of speed, cost, and flexibility of transactions.