Does Uniswap have another serious competitor?
QuickSwap, a decentralized exchange running on Layer-2 solution Polygon has seen a surge in both transaction volume and unique active wallets over the last 7-days. The platform allows users to trade at fast speeds with close-to-zero gas fees.
QuickSwap launched in February 2021 and is fundamentally Uniswap on the Polygon Blockchain. Looking at similar dapps on Ethereum and Binance Smart Chain puts the recent surge into the context of overall DeFi ecosystem growth. As Ethereum gas fees remain high, users continue to look for cheaper alternatives to trade tokens. Layer-2 solutions such as Polygon are rising to prominence amidst the frenzy.
In the last 7-days transaction volume has increased by over 180% to $25 million. Meanwhile, the number of transactions is up over 96% and users have swelled to 4.7k in the last 7-days meaning the average transaction per user is approximately $416.
Uniswap, the most popular token swap exchange on Ethereum has a 7-day volume of over $7.4 billion with around 160,000 users in the same time frame. SushiSwap, a direct fork of the popular exchange Uniswap meanwhile has over $510 million in transaction volume and around 3.4k users. Interestingly, QuickSwap has outperformed SushiSwap in regards to users but the value flowing from these users is considerably less.
Looking at the number of transactions on Uniswap over the last 7-days we can see just 379 transactions but a volume of over $6.3 million meaning that the average spend is around $16k. So whilst overall activity is less, value is still moving through Ethereum marketplaces despite high gas fees as users are prepared to absorb charges on high-value transactions.
Over on Binance Smart Chain, several DeFi dapps have been performing incredibly well at the start of 2021. Decentralized exchange PancakeSwap, another Uniswap copy, has seen over $4 billion flow through its smart contracts in the last 7-days whilst serving over 125k users.
When looking comparatively, the success of QuickSwap seems insignificant compared to that of Ethereum and Binance Smart Chain DeFi applications. When looked at individually the performance of Polygon’s only active DeFi dapp QuickSwap is impressive. Furthermore, it shows the appetite of users to seek out cheaper and faster alternatives to Ethereum DeFi dapps.
QUICK is the native token of QuickSwap and its value has been steadily rising throughout 2021 from its initial opening price of around $30 it has risen in just over 2 weeks to $482 at the time of writing.
QUICK can be utilized within the QuickSwap platform for staking and yield farming activities which are arguably one of the main drivers of activity within the platform. Yield farming on Ethereum with anywhere between $100 and $1,000 in crypto will almost certainly result in a net loss, due to the high gas fees, especially at peak periods of activity. This problem is avoided on the Polygon Network as each transaction costs a fraction of a cent.
DeFi’s changing landscape
Since DeFi’s inception, Ethereum has had the lion’s share of activity and this is still true. What we are observing is a shift in user activity away from Ethereum based platforms over to alternative and layer-2 solutions to avail lower fees and faster transactions as the bull run continues.
Polygon, formerly Matic, has mounted a serious effort to challenge Ethereum’s DeFi dominance lately. Furthermore, Binance Smart Chain has quickly risen to prominence since its launch last November 2020. Amidst high gas fees, new entrants and the rise of layer-2 solutions means that Ethereum is struggling to retain its crown and maintain user loyalty. For the time being anyway, the metrics indicate that Ethereum’s crown is safe.