- Uniswap gets affected by the impact from Curve exploit.
- The dip in prices raised concerns about Uniswap’s market dynamics.
The recent attack on the Curve protocol sent shockwaves across the DeFi sector, leaving no stone unturned. This breach not only reverberated within Curve’s ecosystem but also had an unexpected impact on another prominent player, Uniswap[UNI].
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The domino effect
In the days leading up to the weekend, Curve’s 3pool and Uniswap V3’s main USDT-USDC pool encountered unusual activity driven by escalated USDT selling.
Strikingly, this trend emerged in mid-July, with Uniswap experiencing approximately $100 million in net selling from 15 July to 22 July. Although the net selling tapered off towards the latter part of July, it saw a resurgence on 31 July, coinciding with the Curve exploit.
Uniswap faced net selling of around $40 million, while Curve witnessed a similar pattern with approximately $35 million. Presently, the Curve pool stands imbalanced, dominated by 60% USDT.
Notably, USDT also encountered a minor dip below its dollar peg on centralized exchanges in recent days, sparking questions about market dynamics and influencing factors.
Source: Dune Analytics
The impact on Uniswap becomes more apparent when considering recent trends. Despite a 22.8% surge in activity on Uniswap over the past month, the revenue generated declined by 12.2% according to Token Terminal. This paradox raised concerns about the sustainability of the increased activity and the factors affecting profitability.
Adding to the narrative, the activity of Miner Extractable Value (MEV) bots on Uniswap surged. At the time of writing, Uniswap was host to 27% of all sandwich attacks orchestrated by MEV bots. These bots manipulate transactions for financial gain, often at the expense of regular traders.
Source: Dune Analytics
How is UNI doing?
This series of events could potentially influence UNI token’s performance. Over the past week, the token faced a decline from $6.60 to $5.84. The drop was reflective of the broader uncertainty pervading the DeFi space.
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Furthermore, Uniswap’s declining velocity, measured by the frequency of trading, points to decreased trading interest among users. A similar pattern is evident in the declining network growth, suggesting a waning attraction for new addresses to buy UNI.
Interestingly, the supply held by top addresses grew, indicating heightened interest from whales compared to retail investors. The interest from whales could propel UNI prices in the future.
Source: Santiment
