Uniswap facilitated approximately $110 billion worth of trades in the second quarter of 2023, $20 billion more than the $90 billion Coinbase handled during the same period.
According to the analysis, Uniswap’s spot trading volume first surpassed Coinbase in the first quarter of 2023. During that period, Uniswap and Coinbase facilitated trades amounting to approximately $155 billion and $145 billion, respectively.
Uniswap flipped Coinbase’s spot trading volume in Q1 and Q2 2023. pic.twitter.com/Aacp2vTaVJ
— Ryan Rasmussen (@RasterlyRock) August 22, 2023
Coinbase encountered a more substantial decline in spot trading activity during the bear market, with a decrease of 83% from around $540 billion in the fourth quarter of 2021. In contrast, Uniswap’s trading volume decreased by 50%, going from $235 billion during the same period.
According to a recent CoinGecko report, Coinbase has an average market share of 76.3%, which means that approximately 3 out of every 4 American crypto investors use Coinbase.
Coinbase is the dominant player among centralized cryptocurrency exchanges in the United States of America 🇺🇸 with a 76.2% average market share as of March 2023
3 out of every 4 U.S. crypto investors use @coinbase.
A report by @coingecko pic.twitter.com/HW0Yh2ExvV
— BitKE (@BitcoinKE) April 20, 2023
Despite the increase in trading volume on the decentralized exchange in 2023, Uniswap’s UNI token has experienced a 10% decline in 2023. Notably, UNI is still trading 90% below its peak value reached in May 2021.
Meanwhile, the decentralized exchange has been working to expand its market share with new products.
In June 2023, Uniswap released the code for its upcoming version known as v4. This new protocol will introduce several enhancements, including:
- The inclusion of limit orders
- Automated compounding of fee revenue for liquidity providers, and
- The incorporation of customizable plugins
Additionally, Uniswap v4 pools will have the capability to function as a time-weighted average market maker (TWAMM) enabling traders to execute significant orders gradually over a period.
Uniswap Labs intends to launch v4 following Ethereum’s upcoming major upgrade known as ‘Dencun.’
In July 2023, Uniswap introduced its decentralized exchange (DEX) aggregation protocol called UniswapX. This protocol permits third-party entities, operating as market makers, to vie for order flow by offering traders the most favorable price.
Uniswap stated that the protocol also includes safeguards against Maximal Extractable Value. Currently in beta, UniswapX is accessible to users who choose to participate.
The DEX’s continued growth is in contrast with the devastating effects of the 2022 bear market on centralized cryptocurrency companies which experienced significant losses of billions of dollars in customer assets for exchanges, lending platforms, and venture capital firms.
This turmoil further strengthened the argument in favor of decentralized protocols that function based on pre-defined code rules instead of being subject to human discretion.
In addition, regulatory uncertainty facing Coinbase and centralized exchanges in the United States, and globally, are also likely driving volumes onto decentralized exchanges like Uniswap where regulatory is slow to catch up, and in some cases, practically impossible to enforce.
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