Key Points
Uniswap’s Unichain Could Boost Revenue
Michael Nadeau, founder of DeFi Report, has suggested that Unichain, the upcoming layer 2 solution from Uniswap Labs, could increase the company’s value.
He believes this could also benefit its token holders.
In a post on Oct. 14, Nadeau stated that Unichain could earn Uniswap Labs almost $500 million annually.
This income would be derived from settlement fees that would otherwise go to the Ethereum network.
Nadeau explained that once Unichain is launched, the protocol will no longer have to pay a $368 million settlement fee to Ethereum validators.
Instead, these funds will go to Uniswap Labs and likely UNI token holders.
Uniswap could also benefit from staking maximal extractable value (MEV).
This is the maximum value that miners or validators can gain from rearranging and reordering transactions waiting to be added to the blockchain.
As Uniswap owns all validators on the Unichain network, Nadeau predicts that the MEVs will no longer go to Ethereum validators.
This could add an estimated $100 million to Uniswap’s yearly revenue, based on last year’s MEV percentage.
Last year, Uniswap generated $1.3 billion from trading and settlement fees across five of its primary chains, including Ethereum, Optimism, BNB Chain, Base, and Polygon.
Unfortunately, none of these funds went to the protocol or its token holders.
With the launch of Unichain, Ethereum validators could lose a significant portion of the $368 million they would receive from Uniswap’s settlement fees.
ETH token holders could also be negatively affected due to the protocol burning less ETH and the allocation of settlement fees going to UNI token holders.
In September 2022, Ethereum co-founder, Vitalik Buterin criticized the idea of Uniswap creating a layer 2 blockchain.
He stated that a Uniswap chain or rollup does not align with Uniswap’s main value proposition.
On Oct. 10, Uniswap Labs announced its plans to launch a new open-source Ethereum-based layer-2 network called Unichain.
The project, powered by Optimism, aims to address scalability issues that have hindered Ethereum’s broader adoption.
At the time of writing, the layer 2 solution is available on a live private testnet.
A public mainnet launch is scheduled for later this year.