Uniswap, the Automated Market Maker (AMM) for decentralized token swaps, looks like it will break through the $3 billion milestone of Total Value Locked (TVL) this week. But with the liquidity mining programs for farming UNI token nearing the end – where will DeFi farmers turn to next?
According to metrics from DeFi Pulse, Uniswap is the top-ranked DeFi protocol by TVL. And in the DEX category, it is way ahead of any competition. Additionally, the UNI/USD price is up by 40% compared to last week. However, we have to remember the liquidity shake-up that occurred during August when the first clone SushiSwap appeared. For a time liquidity providers earned more rewards via yield farming SUSHI. As we know most yield farmers are not loyal to any platform – they will go where they can earn the most returns!
UNI Token Farming Nears End
The four liquidity pools that enable users to earn UNI tokens hold a massive amount of the protocol’s liquidity. In fact, roughly $2.25 billion is deposited in ETH, wrapped BTC, and stablecoins across the four pools. Currently, the most popular farming pair is via wBTC which means once the rewards stop we could see a big migration to a different DeFi protocol.
UNI farming continues until November 17th, afterwards it’s more than likely that liquidity farmers move to look for the next best opportunity. You should beware of this date even if you don’t farm via Uniswap or as an ETH trader! Because DeFi farmers will evaluate their position, they may choose to sell big chunks of ETH if the price has pumped since they entered the pool. Additionally, expect more volatility on the UNI market as some farmers may have been waiting until the end to claim their rewards. To summarise, you should expect an increase in volatility!
What is DeFi Farmers Next Opportunity?
With new platforms being released on a nearly weekly basis, all with their farming operations and tokenomics – it’s hard to know exactly where the liquidity will migrate too. But, it seems more likely that Uniswap farmers are after protocols with a history and not simply this week’s farm. Less risk of being rug pulled!
Here is a collection of DeFi farming protocols we’ve looked at in detail and recommend exploring: