Overview of analysis:

Uniswap is one of the important tools used on Ethereum or decentralized exchange. The important aspect of this investigation is considering the stable coins on this DEX. The consideration of stable coins is crucial metric on evaluating the application of DEXs.

This analysis has been organized based on the following parts:

1. Identification of stable coins and find out the most used ones.
2. Determine the application of these stable coins on swaps of Uniswap
3. TVL analysis of Uniswap pools by stable coins
4. The comparison of Uniswap V2 and V3

The analysis has been done from the start of May, 2022 for consideration of impacts of market crush and bear market on application of stable coins on Uniswap.

What is Uniswap?

Uniswap is an Ethereum-based decentralized exchange for trading ERC-20 tokens. Unlike many exchanges that are centralized and you have to trust intermediaries, this DEX is a tool for people in the community and people can use it to exchange tokens, so that there is no need for intermediaries and third parties; At UniSwap, you trust smart contracts. Also, unlike many other exchanges, UniSwap does not match the buyer and seller to determine the price and execute the trade.

The May 2020 release of UniSwap version 2 saw a major upgrade that enabled direct ERC20-to-ERC20 swaps, removing the wrapped token from the equation where necessary. UniSwap also added support for ERC20 incompatible tokens such as OMG and USDT in version 2 and a series of technical improvements that made it more attractive to use. In the second version of UniSwap, a fee of 0.3% is charged for transactions, which is divided among the liquidity providers of that pool, according to the amount they provided liquidity.

In May 2021, version 3 of UniSwap was launched, which added new features to the platform; First of all, the liquidity feature is centralized. This feature enables liquidity providers to provide liquidity at a customized price range.

The third version of UniSwap has also added more commission levels, enabling traders to better determine their risk levels when trading volatile assets.

Methodology:

The data provided by Flipside has been utilized to handle this analysis.

• Identification of stable coins:

  select tokens with avg(price) between 0.99 and 1.01 in specific time period

• Swaps of stable coins on Uniswap

  from ethereum.core.ez_dex_swaps where PLATFORM ilike '%uniswap%'

• TVL analysis:

  from ethereum.erc20_balances where SYMBOL in ('USDC','USDT','DAI')

• Comparison of V2 and V3:

  Select PLATFORM and handle swap analysis for both Uniswap versions

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Part 1: Stablecoins on Uniswap:

Summary of results:

The first part of this analysis contains the table that listed the stable coins used on Uniswap by their first usage date and number of application (swaps). The first used stable coin on Uniswap according to the data provided by Flipside is USDC token.

According to this table and donut chart, the USDC, USDT and DAI are the most used stable coins on Uniswap and have been selected for deep analysis on Uniswap platform on the next parts of analysis.

Part 2: Swaps and Volume on Uniswap

Key findings:

• From the top selected stable coins that has most usage on Uniswap, the USDC has over 50% of swap volume and takes the first rank.
• The daily swap volume analysis reveals the highest application on May 12 and 13, 2022 which are coincidental with general market crush on Crypto universe.

Findings 2:

The rest of the outcomes have been summarized in the following statements:

• The number of swaps for top three stable coin on Uniswap shown the increasing trend over time and the highest count of swaps happened on July 21, 2022 for all three stable coins.
• The cumulative volume of stable coins on Uniswap demonstrated the growing trend of USDC over other two and the gap between USDC and other stable coins has been increasing accordingly.
• The cumulative count of swaps for stable coins on Uniswap shown the domination of USDC and increasing pattern for difference between USDT and DAI.

Part 3: TVL analysis

Key findings:

The TVL analysis is one of the crucial parts of investigation on stable coins on Uniswap pools.

• The area belongs to the USDC has dominated the graph with larger space.

• The TVL of USDT on Uniswap pools has reached an approximately fixed value after June 20, 2022.

• After July 6, 2022, the TVL of DAI and USDC have been reduced significantly and then reached a fixed value since the final days of July.

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Part 4: Uniswap V2 and V3:

Key findings:

The explanations related to the Uniswap V2 and V3 have been provided in the previous parts of analysis. Now we want to determine the share of each version on volume and number of swaps on Uniswap platform.

• From the count of swaps point of view, the number for each version are close together but V3 has more swaps since start of May.
• The highest swap count for V2 happened on June 13, 2022 with over 17.2k swaps and the V2 has highest swap count on July 18.
• From the volume of swaps aspect, the V3 has been dominated the process and the highest application (volume of swaps) for both of the versions occurred on date related to Market crush.
• The cumulative analysis has been validated the previous comments and the gap between volume of usage for both versions has been grown rapidly.

References and useful links:

• Uniswap official website
• Medium on Uniswap
• GitHub on Uniswap

Author:

Credited by MZG

Discord handle: m.zamani#0361

Twitter handle: @GargariZamani