UNI, the governance token of decentralized exchange Uniswap, fell by 30% overnight from its all-time high of $7.37 to its current price, $5.13. Trading volume for the coin also collapsed, from yesterday’s daily average of $6 billion to $2.2 billion today. But while its token falls in price, business on Uniswap is better than ever.
The coin, which launched on Wednesday, is the latest high-profile governance coin minted by a decentralized finance protocol (other include Compound’s $COMP and yearn.finance’s $YFI). Uniswap is an automated market maker, meaning it facilitates token swaps. To swap, say, ETH for UNI, one can draw upon the reserves of the pairing provided by other users.
UNI soared in price shortly after launching, from $1 on Thursday to its peak of $7.37 on Saturday. Major exchanges, among them Coinbase, Binance, and Bitfinex, listed the token. But $UNI’s pump wasn’t to last—though, just four days into trading, no conclusions can be drawn about the coin’s fate.
The coin is a riposte to SushiSwap, a clone of Uniswap that launched its own governance token, $SUSHI. Like $UNI, $SUSHI is earned from using the protocol. SushiSwap took business away from Uniswap, so Uniswap minted its own governance token.
So far, the plan has worked. On September 17, the day after launch day, customers had locked in $748 million worth of cryptocurrency in Uniswap’s smart contract, according to DeFi Pulse. Now, $1.93 billion is locked up in its smart contracts. Meanwhile, the amount of crypto locked in SushiSwap has declined, from a peak of $1.42 billion on September 12 to $516 million today.