Unichain could redistribute millions of dollars in value to Uniswap Labs and UNI token holders, claims DeFi Report’s Michael Nadeau. Not everyone is convinced that layer 1 liquidity will migrate.
Published October 14, 2024 at 6:24 am EST.
Uniswap Labs is the latest entrant into the layer 2 ecosystem – last week the company behind decentralized exchange Uniswap revealed plans to launch “Unichain” in the coming weeks.
Uniswap founder Hayden Adams told Unchained that the motivation behind the new layer 2 was to tackle the fragmented user experience of decentralized finance (DeFi), where liquidity on each network is separated from capital on others.
According to research According to The DeFi Report, one of the biggest beneficiaries of Unichain will be Uniswap Labs, to the detriment of Ethereum validators.
DeFi Report founder Michael Nadeau noted that instead of paying $368 million in settlement fees to Ethereum validators, Uniswap Labs and potentially UNI holders would capture all of that value when they launch on Unichain.
Nadeau also believes that Uniswap Labs will be able to capture maximum extractable value (MEV) since they will own Unichain’s validators. MEV is the maximum amount of value that can be extracted from a blockchain network by manipulating the order, inclusion or exclusion of transactions within blocks.
“The MEV is estimated to be around 10% of the total fees paid on Uniswap ($100 million over the last year). They will also have the opportunity to share part of it with token holders,” Nadeau said.
Other winners from the move to Unichain will be liquidity providers Uniswap, which could potentially participate in settlement and MEV, and Optimism, which sits behind the layer 2 blockchain network called “Superchain” on which Unichain is built.
Besides Ethereum validators, Nadeau expects ETH token holders to also lose out due to less ETH burned and settlement fees. Arbitrum and Base sequencers could also lose some fees and MEV to Unichain.
Several community members disputed Nadeau’s reasoning. Some critics have argued that trading volume will not automatically migrate to Unichain, while others have argued that one of Unichain’s main selling points is that it is designed to generate little or no MEV .
October 14, 2024, 9 a.m. ET: This article has been updated to correct the spelling of Unichain.
