Earlier this week, leading decentralized exchange Uniswap shocked the crypto world when it released the UNI token after months of anticipation.
The coin was released retroactively to almost all historical users of the platform, but even still, the coin surged after its launch, shaking off selling pressure from those dumping their free allocations.
From the lows put in just an hour after the launch, the Ethereum-based UNI has surged over 600 percent, reaching a price point of $7 as of this articleâ€™s writing as per CryptoSlate data.
The coin has now reached a point where its market capitalization is nearing $1 billion, despite a mere 15 percent of the coinâ€™s supply having been emitted.
Uniswapâ€™s (UNI) launch could trigger another DeFi boom?
Maple Leaf Capital â€” a crypto consultant and financier that has focused on DeFi over recent months â€” commented that the rapid growth in UNIâ€™s market capitalization to $1 billion circulating and beyond will likely result in a second wave to the DeFi rally:
â€œ10th reaction and itâ€™s a real alpha leak. As UNI gets to 1-1.5 Bn circulating and hopefully market doesnâ€™t shit the bed, all these defi coins will look cheap again and the ceiling is now opened up + funds take some profit go rotate back.â€
We already saw this to some extent during Fridayâ€™s trading session.
When UNI printed a blow-off top above $8.50, falling to $6 in the span of about five minutes, Yearn.finance immediately surged by eight percent. Other DeFi tokens, along with Bitcoin and Ethereum, also saw healthy jumps as capital from UNI was cycled into other crypto markets.
Not everyone is convinced
Qiao Wang â€” former head of product at Messari and a prominent industry commentator â€” has shared a different take on UNIâ€™s rally.
He said that the release of the Uniswap token will likely only mark a â€œrelief rallyâ€ for the DeFi space after it plunged 30-50 percent early in September:
â€˜It all started with COMP. SUSHI was the blow-off top. UNI was the relief rally. Mini-winter is nice though as we can focus on building again. Next year will be a good year. Micro lots of new exciting products and macro risk-on everywhere.â€
This sentiment is in line with that shared by another analyst in the space, Theta Seek.
They said that there are a number of reasons why the growth in Ethereumâ€™s DeFi space is likely reaching a plateau for the time being. As reported by CryptoSlate earlier this week, the reasons include but are not limited to:
- User experience is still mediocre due to the fear of losing funds in transactions and high transaction fees.
- The value of capital entering the space has seemingly started to slow down; it may be that DeFi is absorbing value from other cryptocurrencies as exposed to external inflows.
- Regulators have begun to take notice of DeFi, especially the key aspect of stablecoins, which could threaten companies and innovators in the space.