Uniswap, the DeFi protocol that has long been the flagship of these ecosystems, has been displaced by MakerDAO, which now ranks as the number 1 DeFi protocol by market liquidity.
Uniswap, the popular and acclaimed decentralized finance protocol (DeFi) is losing the battle against MakerDAO, with over 49% of its total liquidity outside the decentralized exchange (DEX). In the last few hours, Uniswap went from having a Total Value Locked (TVL) of more than $3,1 billion to just $1,48 billion, data platform DeFi Pulse shows.
Source: DeFI Pulse
Uniswap's recent liquidity drop is a result of massive withdrawals of funds from users and investors of the protocol who are now directing their funds towards other projects in the ecosystem. The reason behind these withdrawals is the recent closure of the farming or the Uniswap liquidity provider reward program that ended on November 17. For days, the Uniswap community has been discussing the next step after the temporary closure of this program, which allows users to earn rewards for providing liquidity within the ETH/USDT, ETH/USDC, ETH/DAI and ETH/WBTC pools.
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Maker, WBTC and SushiSwap growing in liquidity
After debuting as the #1 DeFi protocol by liquidity on the markets, Uniswap fell to third place, ranking after MakerDAO, the decentralized lending and savings protocol and WBTC, the token Bitcoin en Ethereum.
For its part, although MakerDAO is now the one that occupies the first place among the decentralized finance protocols by capitalization, Sushi Swap, Uniswap's counterpart and rival, has grown by more than 148 % since the closure of the UNI rewards program was announced, SushiSwap, which had a TVL of just over $330 million, is now on the verge of reaching $1 billion in liquidity.
Uniswap, on the other hand, has been a major milestone in decentralized finance history, being the first DeFi protocol to hit the $2 billion TVL mark in September and repeating the feat just a month and a half later when it surpassed $3 billion in TVL as recently as November 11, according to DeFi Pulse.
Proposal for governance at UNI
DeFi users and investors are migrating their funds to other projects that allow them to generate rewards and returns, while the Uniswap community discusses the details of opening farming again, and extending it for two more months, while developers and the community also come up with a new strategy that allows users to generate profits over a long period of time in the medium term.
On debate As of now, Uniswap proposes to maintain the same four liquidity pools that were opened during genesis, ensuring UNI token distribution and decentralization and governance over the project. However, the community is planning a reduction in the total token distribution, from 10 million UNI/month to 5 million UNI/month, for a total of 10 million tokens over a new two-month period. With these new adjustments, each liquidity pool will receive a total of 1,25 million UNI tokens/month, or 41.666 tokens/day or 6,75 tokens/block.
Schedule of events
On November 17, the liquidity reward program formally closed, so the community will begin the process to present and approve the Uniswap proposal. First, as of this Thursday, November 19, the instant meeting that will allow the consensus verification to continue will conclude. Then, the consensus verification process will begin on November 20, which requires a minimum “quorum” of 50.000 UNI to advance.
If this poll is successful, the process for the formal governance proposal will begin, which requires 10 million UNI to submit the proposal and begin the voting process and 40 million UNI to meet the minimum approval quorumThe proposal submission process begins on November 26 and will last 6 days and 4 hours, ending on December 2, as indicated in the statement. Likewise, if the proposal is approved, the new liquidity rewards and incentives program will begin on December 4, which closes on February 1, 2021.
The third time could be the charm
In the past, the project developers have submitted two governance proposals on Uniswap that failed by truly ironic numbers. The first one failed to pass despite having 2% of the required votes; that is, 98 million votes in favor of the 39,6 million required, against only 40 thousand votes against. The second proposal met a similar fate, with just over 700 million votes in favor, out of a total of 37,5 million as the minimum requirement, against about 40 million votes against.
As we can see, neither of the two previous proposals presented by Uniswap managed to reach the minimum quorum required to be approved, let's hope that the third time is the charm for this particular DeFi project.
At the time of writing, the UNI token is trading $3,67 USD, and shows a 4,5% growth in its value in the last 24 hours.
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