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This Week In DeFi – October 20

This Week In DeFi – October 20

As of October 17, Uniswap has implemented a 0.15% fee for certain token swaps on its web interface and wallet.

Alex Miguel
October 20, 2023

Happy Friday, DeFi readers!

This week…

Uniswap implements 0.15% fee via UI
Circle launches gas-free abstraction feature
Ethereum’s low fees test the “ultra sound money” theory
dYdX will not generate trading fee revenue from v4

Uniswap implements 0.15% fee via UI

As of October 17, Uniswap has implemented a 0.15% fee for certain token swaps on its web interface and wallet.

The fee applies to a range of major tokens, including ETH, USDC, WETH, USDT, DAI, WBTC, agEUR, GUSD, LUSD, EUROC, and XSGD.

It’s important to note that the fee is separate from the base Uniswap Protocol fee. It is expected to generate approximately $114,000 per day and around $42 million in annual revenue, providing resources for further development and expansion of crypto and DeFi, according to founder Hayden Adams.

Uniswap's extra fee transfer costs 12k~ extra gas (+8% on an average 150k gas swap). In this 0.01 ETH swap, the swapper was effectively charged 25¢ in gas to give Uniswap 2¢ in fees.
Not great.
— AzFlin (@AzFlin)
3:32 PM • Oct 18, 2023

Circle launches gas-free abstraction feature

Grab, the Southeast Asian superapp with 180 million users, is partnering with USDC issuer Circle, to provide fee-free NFT experiences for Singaporean users.

This collaboration will utilize Circle's Gas Station service, allowing developers to cover the gas fees associated with user transactions, reducing friction for blockchain integration.

Grab's Polygon-based web3 wallet, which launched in September, offers NFT vouchers for use at various Singaporean businesses, and leverages Circle's Programmable Wallet service.

1/ Introducing Gas Station and Smart Contract Platform - built for #devs & available in beta!
Our two new #Web3 Services products provide solutions for devs & businesses to remove cost, complexity & friction for app users. Let’s dive in to learn how our Web3 services continues… twitter.com/i/web/status/1…
— Circle (@circle)
1:05 PM • Oct 19, 2023

Ethereum’s low fees test the “ultra sound money” theory

Ethereum is currently experiencing a shift towards a low-fee regime, with its revenue from fees hitting its lowest point since April 2020 – a whopping 90% decrease from its peak in May.

This change has been mostly attributed to reduced speculative activity and the migration of users to Layer-2 platforms, impacting Ethereum's 'ultra sound money' thesis.

While lower fees benefit users, they also contribute to an inflationary supply for ETH, as the network burns fewer tokens than it issues.

ETH:BTC has steadily declined in the past year— even as Ethereum was burning Eth, lowering supply nearly 300k one year post Merge.
It’s down 10% since mid-September when—coincidentally—Ethereum became 🔺inflationary🔺again due to low network demand and dwindling gas fees
— Dan Webb (@hrtlndbitcoin)
4:02 AM • Oct 19, 2023

dYdX will not generate trading fee revenue from v4

Decentralized derivatives exchange dYdX, has announced that it will transition into a public benefit corporation and will not generate trading fee revenue from its upcoming v4 platform – aligning itself with the community and prioritizing public interest.

Although dYdX will continue to earn trading fee revenue from previous protocol versions like v3, its focus lies on achieving full decentralization. With the launch of its own dYdX Chain, trading fees will be distributed to node operators and token stakers, and the company is well-funded with six years of runway.

1/ We’ve updated our charter to officially become a Public Benefit Corporation 🤝
We’re doing this because we’re committed to aligning our interests with our traders, builders and the web3 community.
— dYdX (@dYdX)
6:59 PM • Oct 17, 2023

Uniswap fees and third-party front ends – the beginning of the end for “official” UIs?

Uniswap has taken an interesting and possibly unprecedented step for a major exchange, with its front-end fee implementation – but what might the effects of this be?

In order for the fee to be viable and accepted by Uniswap users, it may boil down to a single mathematical question: Are the expected 0.15% savings from using a free, alternative front-end user interface worth the risk of using an unofficial front-end?

If a trusted alternative Uniswap front-end becomes available, or if users simply believe the savings are worth the risk, we may see an influx of third-party user interfaces with their own unique features.

The move may open the floodgates for user acceptance of all kinds of new and innovative front-end experiences, all providing different styles of access to popular protocols – perhaps even outside of Uniswap.

We’ve already witnessed a rapidly acceptance of liquidity managers and Telegram-based Uniswap bots recently. Will this additional fee be the straw that breaks the camels back, and disperses Uniswap users to other front-ends for good?