Uniswap price pumps, DeFi hits 14-month high amid Binance drama

Uniswap (UNI) is the best performing top cryptocurrency since word of Binance’s $4 billion settlement with the US Department of Justice (DOJ) first broke.

UNI, a governance token for the top decentralized exchange by trade volume, has jumped more than 22% over the past three days, from around $5.20 to $6.35. 

The move has swelled UNI’s market cap by more than $750 million to $4.8 billion, it’s highest point since August. UNI is now valued above bitcoin cash (BCH), although it’s still 86% down on its all-time high set in 2021.

Bloomberg first reported word of Binance and former CEO Changpeng Zhao’s run-in with the DOJ on Monday. Zhao stepped down as CEO the next day and pleaded guilty to Bank Secrecy Act violations as part of a plea deal.

Prosecutors are now pushing for Zhao, who was released on $175 million bond, to stay in the US until sentencing in February.

Crypto prices initially held steady but by the time official confirmation came on Tuesday, 5% had been wiped from the market’s total cap, equal to $68 billion per TradingView data.

Binance’s native cryptocurrency BNB slid up to 10% while bitcoin and ether slipped around 4% each.

Crypto overall has since fully recovered, now back at $1.4 trillion — still up by more than a quarter since BlackRock filed its spot bitcoin ETF application in June. 

The DeFi sector is particularly sharp. The total value of all DeFi token projects is now $57.75 billion according to TradingView, up by more than a quarter over the past month.

DeFi is now at its largest valuation since August 2022, only weeks before FTX went bust.

BNB still has a ways to go, however. Out of the top 30 or so cryptocurrencies by market cap, BNB has been the second-worst performing since just before Bloomberg’s Monday report, down 5.7% as of 8:30am ET. Polygon (MATIC) had shed 6.8%.

Uniswap’s overperformance could be attributed to kneejerk reactions from investors looking for a narrative to latch onto amid the chaos. 

After all, the US government has notched a big win against the largest centralized crypto exchange for lax money laundering protections. Similar actions against decentralized exchanges could be more difficult.

Uniswap Labs (the startup) has also seen rising revenues after adding a 0.15% fee on certain trades through its interface in October, although those won’t flow down to the protocol or token holders directly.

Updated Nov. 23, 2023 at 10:21 am ET: Clarified revenue reference.

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