UniSwap, the largest decentralized exchange in trade volumes and total value locked, has announced it will support and launch on the Polygon Layer 2 protocol.
The move to launch on Polygon follows a community vote to deploy UniSwap V3 through the governance process.
UniSwap V3 commands the largest trade volumes of any DEX with total value locked now at over $8 billion as of December 20, 2021.
The support for Polygon now means that UniSwap supports the following Layer 2 solutions:
According to the UniSwap governance forum proposal to depoy UniSwap V3 to Polygon PoS Chain, there are several major reasons why this move is necessary.
- Polygon PoS has the second strongest DeFi ecosystem, right after Ethereum L1
- Deploying to Polygon PoS can bring a lot of benefits (user base growth, huge savings for users, higher user activity, higher revenue, market capture, return to the original DeFi vision etc)
- We are willing to incentivize Uniswap adoption, financially and otherwise
- Polygon PoS is battle-tested
- Polygon is aligned with Ethereum and its values
The move onto Polygon is well informed.
Polygon is the leading platform for Ethereum scaling and infrastructure development. It is rapidly building a product suite that will offer developers easy access to all major scaling and infrastructure solutions:
- L2 solutions/Rollups (Polygon Hermez 47, Polygon Miden 29, Polygon Nightfall 26);
- Sidechains, stand-alone and enterprise chains (Polygon SDK 13);
- Hybrid solutions (Polygon PoS 20);
- Data availability solutions (Polygon Avail 13) and more.
Polygon is by far the most adopted scaling effort in the Ethereum ecosystem, with 3,000+ applications hosted, 1B+ transactions processed, 100M+ unique user addresses and ~$5B+ in assets secured.
The proposal lists 6 benefits that will accrue from the deployment:
- User base growth – Many projects, such as Aave and PoolTogether, have significantly expanded their user base after deploying to Polygon PoS
- Huge savings for users – With transaction fees being on average 1,000x lower than on Ethereum L1, Polygon PoS enables projects to save millions of dollars to their users
- Higher user activity – Low fees are subsequently encouraging users to interact more with the project; this is the case with almost every Ethereum L1 protocol that got deployed on Polygon PoS
- Higher revenue – Projects coming from Ethereum L1 are often seeing higher revenue for their liquidity providers and governance DAOs due to liqudity mining incentives and higher user activity
- Market capture – Polygon PoS is at this point a very attractive and lucrative market to try to capture and capitalize from, likely right after Ethereum L1
- Return to the original DeFi vision – projects coming from Ethereum L1 normally significantly expand their user base. These new users are mainly people who were “priced out” from L1, i.e. unable to use these protocols because of high transaction fees. Polygon, due to its scaling solution, can be considered to return to this original vision
RECOMMENDED READING: Understanding the Polygon Network and its Quest to Become an Internet of Blockchains
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