The total value of assets locked in leading decentralized exchange Uniswap has plummeted by 38% in 24 hours amid the conclusion of its UNI liquidity rewards program on Nov. 17.
Meanwhile, “vampire” clone SushiSwap has doubled its TVL and is aggressively pursuing additional liquidity.
As of this writing, Uniswap’s TVL is down a total of 43% since posting an all-time high of $3.07 billion just three days ago. It now sits at $1.75 billion and is still falling.
Following the sharp decline in Uniswap’s liquidity, token holders have embarked on the process of voting for a new governance proposal that seeks to reinstate rewards in the form of UNI tokens for liquidity providers.
The new proposal, put forward by Cooper Turley of crypto-powered music streaming platform Audius, cuts the amount of UNI rewards in half compared to the former program. While 2.5 million UNI tokens were previously distributed to the liquidity providers of Uniswap’s WTBC/ETH, USDC/ETH, USDT/ETH and DAI/ETH pools each month, the new proposal would see 1.25 million UNI designated to each pool monthly for two months — equating to 10 million tokens total, or roughly 4.6% of UNI’s current circulating supply.
The community will first vote on a “snapshot poll,” which must receive 25,000 votes in favor within three days to proceed onto a secondary “consensus check” poll with double the required vote quorum over five days.
Should the consensus check garner 50,000 yes-votes, Audius’ proposition will become a fully-fledged “governance proposal” that must attract 40 million affirmative votes in order to be approved for implementation.
The proposal was published on the same day that rival DEX SushiSwap unveiled new incentives for providing liquidity to the four pairings Uniswap has stopped providing incentives for. The new rewards scheme replaces the platform’s previous revolving “menu of the week” incentive structure:
2) We are removing our Menu of the Week (MotW) and reallocating the yields to theses pairs :— SushiChef (@SushiSwap) November 16, 2020
- ETH/USDT Tether Turle
- ETH/USDC Circle Snail
- ETH/DAI Donald Dai
- ETH/wBTC BitCorn (NEW)
SushiSwap appears to be the beneficiary of the conclusion of Uniswap’s initial rewards program, with SushiSwap’s TVL almost doubling in one week, from $260 million to nearly $500 million.
SushiSwap garnered criticism after launching a “vampire mining” attack on Uniswap in early September that saw SushiSwap briefly emerge as the top DEX by liquidity.
However, SushiSwap’s dominance was short-lived, with the protocol’s TVL crashing more than 80% from $1.43 billion on Sep. 12 to $265 million within one month, before trending sideways until last week.