ver the past six months, DeFi, the colloquial term for decentralized finance built on open-source blockchain technology, has experienced explosive growth – the total amount of value under contract has ballooned from under $1b to over $12b in just 6 months.
If 2020 was the “summer of DeFi,” it was certainly capped off recently by the much anticipated Uniswap token launch. Any wallet address that had ever traded or supplied liquidity to Uniswap, an automated market maker built on Ethereum that has a triumphant rainbow unicorn as its logo, was rewarded with 400 free UNI tokens – an amount equal to $1,600 at the time of distribution.
So what makes the Uniswap token launch so unique and just how close did the project come from seeing its own demise?
Given DeFi operates in a world of open-source code, a project named SushiSwap, led by pseudonymous developer Chef Nomi (yes, this is real), forked (read: stole) the code base of Uniswap and attached its own native token to incentivize participation in the new SushiSwap protocol. In nearly a week, SushiSwap nearly surpassed the total liquidity of Uniswap at over $1b – a true existential risk to Uniswap’s long term viability.
In turn, Uniswap was forced to consider its own token, in an attempt to claw back its vital liquidity and turn the competitive tide. The Uniswap team and its VC backers successfully distributed 60% of total UNI tokens to the protocol’s 250k users and 50k LPs – a nod to the community that has supported over $20b of trading volume on Uniswap.
Ultimately, using some very savvy token design and rainbow unicorn magic, one of the oldest and most foundational pieces of DeFi has taken back its throne for now. Stay tuned...
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Uniswap’s DeFi Stimulus Check
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