- Uniswap now has more v2 liquidity pools on Layer 2s than it does on Ethereum, with Base leading the pack as L2s continue to gather steam.
- Uniswap continues to fight the SEC on the regulatory front amid a delayed governance vote on incentives that has exposed some cracks in its decentralized ecosystem.
Layer 2s on Ethereum have continued to gather steam as users seek alternatives to the mainnet’s hefty fees. The latest demonstration of this increasing influence is on Uniswap, where v2 liquidity pools on L2s have now overtaken the mainnet.
Launched in May 2020, Uniswap v2 is the decentralized exchange’s first upgrade and second iteration. It introduced new price oracles, flash swaps, ERC20 tokens and more. The exchange has since released v3 and is set to launch v4 later this year, as Crypto News Flash reported.
Uniswap shared on Thursday data that shows users are now deploying more liquidity pools on v2 on Layer 2s than on the Ethereum mainnet.
It’s official: more v2 pools are being created on L2s than on Ethereum 🤯
Looking very blue 🔵 pic.twitter.com/8bretCOtHe
— Uniswap Labs 🦄 (@Uniswap) June 6, 2024
While Arbitrum, Polygon and Optimism were mentioned, it’s Base that has dominated the L2s on Uniswap’s v2 pools, accounting for over 95% of all L2 activity.
Uniswap expanded v2 into L2s in February this year after being on the Ethereum mainnet for over four years. It launched on Optimism, Arbitrum, Polygon, BNB Chain, Avalanche and Base.
At press time, UNI trades at $10.53, losing 1.66% in the past day as volume dipped by 47%.
Base is a Layer 2 built on Ethereum and developed by a Coinbase team led by Jesse Pollak. It claims to have over 350 dApps on its network, with gaming and social finance being the most common. According to Franklin Templeton, over half of all crypto social finance activity (which is a combination of social media with financial features) is on Base. However, DeFi apps, while fewer than social finance and gaming apps, draw the most volume, with Uniswap and Jumper being the leaders in the ecosystem.
Base has proven to be a stroke of genius for Coinbase. The American exchange has traditionally relied on transaction fees for most of its revenue. This model faces great strain during the bear market, making it critical to diversify. Base is the exchange’s best avenue for diversification; in Q1 this year, the network brought in over $56 million in revenue for the exchange.
Layer 2s Chip Away at Ethereum’s Dominance
Uniswap v2 pools are just the latest demonstration of a long-term trend—Layer 2s are chipping away at Ethereum’s market.
As Crypto News Flash reported this week, a report by Bitwise found that L2s are contributing more transactions than the mainnet on Ethereum. In Q1 this year, the ecosystem collectively saw 2.25 million average daily users, up from 250,000 four years ago. This incredible growth has been down to the explosion of L2s, with Base, Arbitrum, Optimism and Polygon among those making the biggest mark.
Data by L2Beat show that Layer 2s are making millions, with Base leading the pack at $6.1 million in May. Blast and Optimism followed suit, each making around $1.5 million.
Data from Dune showed Base making even more at $7 million.
Here’s how much onchain profit L2s earned in May
Onchain profit = Revenue from L2 gas fees – Costs of posting batches and verifying proofs on L1
1. Base – $6.98M
2. Optimism – $1.57M
3. Scroll – $1.35M
4. Arbitrum – $802k
5. Linea – $612k pic.twitter.com/BuvV0yCm3a— Kofi (@0xKofi) June 3, 2024