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Saturday, October 16, 2021

Uniswap: Suggestions That Show The Overvaluation At 36%

Uniswap is a decentralized exchange that is used to swap ERC-20 (Ethereum based) tokens.

Uniswap represents an advancement in the crypto markets, being one of the catalysts of the DEFI revolution. It has been performing well till now.

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A 0.3% fee must be paid for swapping tokens. Therefore, Uniswap makes a revenue of 0.3% of the total swapped value.

Revenue Generated By Uniswap

Revenue generated by the decentralized exchange is expected to increase exponentially. Its value has been projected to rise up to $1663 by 2022.

 Looking at the reported market capitalization of Binance Coin (BNB) it has been deduced that the token is the dominant asset compared to other exchange tokens.

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There is no straightforward relationship between Binance’s trading income and the token economy. Most traders like to use it as a proxy. The contentious burn-out mechanism has lost a little of its impact since April 2019, when the exchange improved the BNB white paper.

Originally, the white paper offered a plan in which BNB tokens equivalent to 20% of the earnings of the exchange would be purchased as part of a “buyback plan”, but the new version rejected that plan.

Nevertheless, excluding the 60 million BNB that has never been in circulation substantially changes the outcome because these surplus tokens are meant to be burned over time.

The remaining exchange tokens are inflationary. It means that the issuing rate is very steep. For instance, Uniswap (UNI) has 611 million tokens in circulation, but that number is expected to reach 1.14 billion in 10 years.

It has been averaging $1.63 billion volume each day, even though it offers solely spot markets. Therefore, the figure is comparable with Binance’s average of $24.3-billion, not including derivatives markets.

Using Uniswap’s 93.3% lower volume, the total estimate shows a $10.3-billion market capitalization based on 50% of BNB’s reported $76.7 billion. Thus, the forecast value comes out 36% below UNI’s actual data.

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