Matthew Harcourt, analyst at Apollo Capital, Australia’s leading cryptocurrency investment firm, shares the fund’s weekly take on what’s happening in the fast-paced and volatile cryptocurrency space.
The world’s largest decentralized cryptocurrency exchange is set to get cheaper and faster soon, and the Ethereum mainnet a little less crowded and expensive.
Uniswap is the leading decentralized funding project in the cryptocurrency space, a smart contract on Ethereum that allows users to trade tokens for a pool of locked-in cash. Compared to traditional exchanges, it is considered revolutionary, in part because Uniswap eliminates the middleman traditionally needed for such exchanges. With Uniswap, everything is handled by an algorithm and smart contracts.
As Ethereum’s “layer 2” scaling solution Arbitrum opened up its mainnet to developers on Friday, Uniswap token holders voted to roll out the exchange on the platform. Arbitrator is one of many options developed to scale Ethereum, which has become bogged down and expensive, a victim of its own popularity.
the @Uniswap The community has come out with overwhelming support for an Arbitrum deployment of Uniswap v3! Until now:
41.35 m UNI
0 UNI https://t.co/esdxa2HIIC
– Hayden Adams 🦄 (@haydenzadams) May 26, 2021
“Arbitrum is a Layer Two scaling solution that will inherit the security of Ethereum Layer One,” says Hartcourt.
“It’s a little different from layer two solutions like Polygon; because Polygon is a side chain – it acts a little different and Polygon uses its own security to maintain the network, it uses its own nodes.
“Arbitrum is a little different, it’s probably more secure because it inherits the security of layer one Ethereum.”
In technical parlance, Arbitrum is an Ethereum scaling solution known as “optimistic stacking.” There is another type of rollup known as ZK-SNARK rollup, which uses zero-knowledge evidence. There are tradeoffs with everyone.
Another optimistic rollup, Optimism, has been teasing for a launch for several months now, with Synthetix as the main protocol on the platform.
“Uni had made a commitment to go into Optimism once it was being deployed, but that was pushed back a bit, so the Uniswap community looked at other solutions,” Harcourt said.
Switching to Arbitrum will make Uniswap cheaper and much faster, along with Layer 1 Ethereum decoding, Harcourt said.
According to Etherscan, Uniswap version 2 has been the main “gas consumer” on Ethereum for the past 24 hours on Friday, using 20.4% of all Ethereum “gas” – 754 Ether, or $ 2.5 million. Uniswap version 3 had used 2.9% of all gas, or 109 Ether.
The Apollo team believes the Uniswap deployment to Arbitrum could take a month or more, Harcourt said.
“But this is really going to be a booster for the Uni Token and the Uniswap Total Value Lock. It’s an interesting development to watch. And it will be interesting to see if other Defi protocols also adopt Arbitrum, which is possibly the most important new Layer two solution. “
There is no token associated with Arbitrum, although there may be one for Optimistic once it launches.
“It’s more than just technology, than a token,” said Harcourt.
On Friday, Arbitrum’s mainnet was opened to developers.
Uniswap’s UNI token – the No.10 cryptocurrency – is one of two Apollo coins to watch this week, although Harcourt warned there were questions about the length of the rollout and whether Arbitrum might have some issues at launch.
The Uniswap website on Friday reported that it had processed $ 1 billion in transactions in the past 24 hours, with $ 1.5 billion of total value locked in (TVL) in the protocol.
Perpetual Protocol (PERP)
The other Apollo coin to watch this week is Perpetual Protocol (PERP), the No. 248 cryptocurrency, with a total market cap of US $ 237 million.
Perpetual is a decentralized derivatives exchange, allowing traders to open positions with up to 10x leverage. Positions are liquidated if they achieve 16x leverage.
“We believe that chain derivatives and decentralized derivatives will be a major market opportunity,” said Harcourt.
There is a lot of futures trading on centralized exchanges like FTX and Binance, he noted.
“We believe that the first product to challenge, derivative protocols capable of capturing this market will be really valuable – and we believe the leader in this area is the perpetual protocol.”
PERP had the biggest market share for months, he said.
The PERP token can also be staked, with token holders receiving rewards from trading fees.
“So he has this cash flow in the token, which is obviously very attractive. And I think there are inflationary rewards for that one too.
Perpetual protocol is enabled xDai, an Ethereum sidechain similar to Polygon.
“They made it really easy to use, and obviously the transaction fees are very fast, low, or no, and you can access leverage, and they have 14 different assets – Bitcoin, Ethereum, POINT, Curve, Cream, Maker, Connect, Sushi … Name it, they have 14 of the highest trading volumes and a huge amount of transactions and a huge amount of Perp token holder fees, so we think it’s really attractive for the long haul.
The views, information or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.Stockhead has not provided, endorsed, or assumed responsibility for the financial product advice contained in this article.