As Uniswap fees accumulate, other trading platforms join the fray

Some industry participants say moves to enable trading fees are a welcome change in sentiment towards revenue creation, while others call it unsustainable

article-image

DIAMOND VISUALS/Shutterstock modified by Blockworks

share

Uniswap Labs has seen $764,000 in revenue since enabling fees on some Uniswap trades two weeks ago, according to Blockworks Research. But it’s not the only DeFi platform to toy with enabling the fee switch.

In recent weeks, Osmosis, Blur, and Hashflow have also received proposals to introduce trading fees. One industry participant said the growing interest in fees is a sign that DeFi is maturing towards a focus on revenue. However, another speculated that fees may be impractical when trading platforms can be duplicated.

Last month, the DeFi giant Uniswap Labs began charging fees on trades through its interface involving certain asset pairs. The interface fee is in addition to the existing fee taken by Uniswap liquidity providers (LPs).

The new fees are on track to generate tens of millions annually for the company. As one researcher pointed out though, only 3% of Uniswap’s total trading volume is subject to the 0.15% fee

A Uniswap protocol-level fee would tax LPs on nearly all trades, but a protocol fee proposal from GFX Labs stalled out this summer. Notably, the fee funds would go to the Uniswap DAO treasury rather than to Uniswap Labs. A GFX Labs representative said an amended version of the proposal could reach Uniswap’s forums as early as December.

The decentralized exchange Hashflow enabled its own protocol-level trading fee Wednesday morning after a governance vote approved the update. Hashflow CEO Varun Kumar said the DEX’s move may be a symptom of fee FOMO in DeFi.

“I do think that proposal could have been inspired based on other protocols adding fees. And they were like ‘Ah, Sushi has a fee and Osmosis and Uniswap [are] adding a fee too, so why is Hashflow not adding a fee?” Kumar said.

Kumar added that there’s a growing interest in enabling trading fees, accompanied by a general sense that protocols should be earning revenue. In past crypto market cycles, compelling white papers or functional but unprofitable products were deemed sufficient by investors, Kumar said. Now, the focus has shifted to actual revenue generation for these protocols.

And crypto trading fees aren’t an untested concept.

“I draw parallels with…the centralized crypto exchanges,” Marc Taverner, CEO of crypto financial services provider XEROF, said. “They’ve had this transaction fee present for the longest of times, and the reason for that being present is to provide sustainable and dependable income to the platform providers.”

Still, not all in the DeFi space are sold on fees. Superposition is a zero-fee automated market maker (AMM) built on Arbitrum. The project’s CEO Shahmeer Chaudhry said that the protocol can generate revenue without trading fees if it scales up enough. 

And with open-source code being commonplace in DeFi, Chaudhry added, trading fees could lead to spin-off projects.

“In crypto, it’s always a race towards zero, right? As soon as you have good fees, you always have a fork that will have less fees,” Chaudhry said.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

MON - WED, MARCH 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience:  Attend expert-led panel discussions and fireside chats  Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts   Grow your network […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

logo.jpeg

Research

Akash is a general-purpose compute platform with GPUs, storage, LLM training or inference, and validator hosting through its two-sided marketplace.

article-image

The SEC could allow half a dozen or more such funds to launch at once, Ark Invest CEO says

article-image

2023 saw a decline in a16z crypto funding, but the behemoth VC firm teased what it’s excited for next year

article-image

“Iran Unchained” launched a new version of its grant platform to make donations to activists easier

article-image

The stablecoin marks the first time a regulated European bank has made a euro-pegged stablecoin available on a crypto exchange

article-image

Build it and they will come, perhaps, but making crypto easier to use is turning out to be just as important

article-image

Amid moves by Itau Unibanco and Nubank, the country could serve as “a proof of concept” for TradFi-crypto integrations, industry research exec says