Decentralized Exchange, Uniswap, Accounts for 80% of The Daily Active DeFi Users
Decentralized Finance (DeFi) recorded a marked year-over-year increase in adoption and usage across the board despite suboptimal user experiences such as UX and gas fees.
“Remember the Internet was slow, clunky & expensive once. L2s launching this year will make DeFi more accessible – faster, better, cheaper,” noted Santiago R Santos, partner at Parafi Capita.
Total value locked (TVL) in DeFi had a 75x growth to $43.5 billion. In terms of stablecoins, their supply grew ~7x to $43 billion YoY, while total borrowing volume across money markets has increased 100x to $9.9 billion.
As for the most popular DeFi protocol, decentralized exchanges (DEX) have seen a growth in their active users.
Over the past year, these active users have grown from a mere 3,000 to the current 67,000. Interestingly, Uniswap accounts for 80% of these daily users.
The popular DEX, which accounts for 60.4% of the total DEX weekly volume market share, recently announced that its much-anticipated V3 is coming in early May, with a special emphasis on increasing capital efficiency.
ThorChain (RUNE), a decentralized liquidity protocol, meanwhile, argues that with V3, Uniswap is making “LP'ing active” — “Active LPs are going to destroy the passive LPs. It's going to return the edge to desks and bots.”
Another interesting facet of this upgrade is the use of Business Source License (BSL) 1.1, which restricts the use of V3 source code for two years. Another popular DEX SushiSwap, which is moving into lending, started as a fork of Uniswap.
7/ I assume other Ethereum connected swap exchanges cannot follow Uniswap v3 model immediately, because they are behind on the innovation curve.
With the new Uniswap 2 yrs time locked GPL license, they cannot just copy-paste the innovation either.https://t.co/d9EmU4SFmD
— 🐮 Mikko Ohtamaa (@moo9000) March 24, 2021
“It's crucial for DeFi protocols to be free & open-source software,” said Chervinsky noting that that is why most DeFi protocols are launched with fully open-source licenses like MIT, BSD, & GPL.
He explained how while people might think enforcing copyright rules against anonymous developers won’t be possible, making the licenses useless, that is not true.
Not only most dev teams aren't fully anonymous, especially as a project succeeds, but developers aren't the only viable target, Chervinsky said.
“US law also allows copyright holders to sue third parties for “contributory” copyright infringement even if they didn't commit any infringing acts directly. Other theories of secondary liability may apply to third parties too,” including those who adopt, support, or use it such as exchanges, DEX aggregators, investors, LPs, and MMs.
Also, enforcement is not the only way; the threat alone is enough at times.
This may come at a cost, though, as “it's crucial for DeFi protocols to be free & open-source,” and many people in the sector also feel strongly about it, he said.
Still, “BSL 1.1's two-year delayed conversion to GPL seems to strike a fair balance between creating a copyright moat & open-sourcing the protocol. Personally, I like it a lot, especially since UNI holders can accelerate the conversion at any time. Governance decides,” Chervinsky said, adding, “it's an elegant bit of legal innovation for DeFi.”