Uniswap Users Are Increasingly Posting Small Trade Sizes

Crypto and some key sub-sectors, like decentralized finance (DeFi) or non-fungible token (NFT) trading or minting, remain dynamic.

Activity in the cryptocurrency market is influenced not only by price but also by time. While some sub-sectors, such as decentralized finance (DeFi), non-fungible token (NFT) trading, and minting, remain dynamic and are expected to grow even more, other changes are settled not by how prices gyrate but by time.

Uniswap users are increasingly posting smaller trade sizes, an observation that might not be surprising given the increasing adoption of the decentralized exchange (DEX) and the entry of more retail traders.

At the same time, DEX users are rapidly climbing as Ethereum finds regulatory clarity and a spot ETF on the horizon.

Events in Uniswap, a leading DEX on Ethereum, draw the interest of Token Terminal, a blockchain analytics platform.

In its latest coverage, the platform observed a curious trend happening in the decentralized exchange.

While the Ethereum ecosystem is expanding and is expected to grow even more, trade sizes on Uniswap are shrinking rapidly.

Over the last two years, the average trade size on the popular DEX has fallen from around $30,000, registered in 2022, to roughly $1,000 at press time.

This observation might not be surprising, especially with the increasing adoption of the DEX and the entry of more retail traders who might want to trade smaller chunks.

Compared to institutions or crypto hedge funds that might want to trade huge chunks, most retailers lack those resources and are more comfortable with lower trade sizes.

This observation makes sense, especially with the explosion of meme coins deployed on the mainnet or layer-2 platforms like Base.

Although Uniswap first launched on the Ethereum mainnet, it is also available on Base, Arbitrum, and Polygon, enabling the trading of tokens in a low-fee environment.

On these platforms, market participants can trade on smaller sizes since they know the fee impact will be lower than on the mainnet.

Another perspective suggests that the rise of competing DEXs built on alternative blockchains like Solana and BNB Chain might be drawing activity away from Uniswap.

Modern blockchains like Solana offer faster transaction speeds and lower fees. With Ethereum processing 15 TPS at optimum, the higher scalability and interoperability with the first smart contracts platform can appeal to some traders.

Meanwhile, the smaller trade sizes on Uniswap come surprisingly alongside a surge in overall DEX activity.

Another Token Terminal report shows that monthly active traders across leading DEXs, including Uniswap, stand at 11.2 million. It is roughly 3 million short of the all-time posted in December 2021.

This observation suggests that though more traders post smaller sizes, more users are keen on exploring and participating in the decentralized exchange space.

Even as Uniswap’s average trade size falls, analysts are still bullish on the protocol and UNI, its native token.

The platform plans to launch Uniswap v4 while Ethereum now has regulatory clarity, especially with a spot Ethereum exchange-traded fund (ETF) on the way.

News source：https://www.kdj.com/cryptocurrencies-news/articles/uniswap-users-increasingly-posting-trade-sizes.html

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