The world’s largest decentralized exchange, Uniswap, has just conducted its first community call primarily to discuss which direction to take when UNI farming concludes on Nov.17.
But the call ended with no clear direction from Uniswap, and no proposals submitted for extending UNI farming or launching new pools, so next week may well bring a lot of volatility to the space.
Uniswap has been running four ETH-based liquidity pools since Sept. 17 that have been earning 583,333 UNI per week, per pool. The collateral injection of over $2.4 billion has propelled the DEX to the top of the DeFi list in terms of total value locked, but those incentives are about to come to an end.
The fear among UNI holders is that token prices may dump in the short term if users withdraw liquidity and sell off previously mined UNI when incentives dry up. In the long term, the reduction in new UNI could help prices. UNI prices have made a slight comeback over the past week, topping $3.
There is also the concern that up to $1.1 billion dollars’ worth of ETH could be withdrawn from these four pools and either sold or reinvested into higher earning incentives. ETH rallied when UNI farming began, so the opposite could occur when it ends.
1/ On 17th Nov, $UNI farming will end.
Right now ~$2.3bn funds are deployed farming UNI, with $ETH being the reference token.
This means that there is currently ~$1.1bn ETH locked up, about to be released into the wild.
Where do you think that ETH will go? pic.twitter.com/nW3via0vH6
— Wangarian (@Wangarian1) November 11, 2020
The community call was hosted by Uniswap team member “Monet Supply.” It began with a roundup of recent governance issues but was quickly steered toward the burning topic of what will happen when liquidity mining ends on Tuesday.
Thank you everyone who attended the @UniswapProtocol community call today!
For those who missed it, here are the video and chat logs of the