Friday, May 14, 2021
Home The Capital Market Thoughts: Uniswap’s Token (UNI) Launches and DeFi Goes Wild Once Again

Market Thoughts: Uniswap’s Token (UNI) Launches and DeFi Goes Wild Once Again

Uniswap has now revolutionized the distribution of governance tokens by giving out the bulk of its token to its community instead of VCs and other deep-pocketed investors.

Uniswap.

It’s the name on the top of each and every DeFi user’s mind right now since 60% of its UNI token’s genesis supply will be given out to its community until it’s gone (over 15% of which has already been allocated). If you’d like to learn more about UNI’s distribution, read on here, straight from the minds of the Uniswap team.

Instead of rehashing the same myself, I’d like to dig into how we might possibly value the UNI token. First and foremost, there’s its maximum supply or the point at which it won’t be issued anymore. For UNI, that’s 1 Billion coins that’ll follow a controlled release over the next four years.

Now before you immediately conclude that such a high supply means UNI’s value will eventually mirror something like Crypto.com’s CRO or Tron’s TRX, consider what UNI’s tied to.

Holders of UNI can not only vote on all updates to the Uniswap protocol over time but also likely directly benefit as the protocol grows over time. Think of UNI as if it were a share of stock in the Uniswap Protocol/DApp itself. This includes collecting fees on certain token as the Synthetix Exchange’s SNX holders and others do on their own respective platforms, as well as the fact that as Uniswap does more trading volume, the interest and confidence in the UNI token may likely grow too.

Take a breather here for a second.

It’s early yet and UNI just launched last night.

Any thoughts I’m sharing here are purely for educational purposes, based on what I’ve taken in from various sources during the initial chaos of the UNI launch. If you’ve been in crypto for any length of time, then you know just how much any sort of theory can change at a moment’s notice.

With that in mind, keeping contingency plans related to UNI seems reasonable, such as setting a range at which you’d absolutely sell it. While doing so, you might pay close attention to important events like the cut-off date for UNI being earned through Uniswap-based liquidity mining, which is currently November 17th, and the fact that a lot of UNI is still held by VC-like whales (powerful, connected crypto projects), despite their improved distribution mechanism.

Whatever sort of strategy you choose to make, the consensus among experts appears to be: “Don’t act on a whim.” In other words, never let fear, doubt, or anything similar drive your actions related to cryptocurrencies/tokens that you hold.

In my view, if you keep yourself centered like this, then you’re already on a reasonable path.

Stay tuned for more market thoughts as the weeks go by. I’m altering my content here to make it more informal and more based on my reactions to crypto market trends (mostly DeFi). If that interests you, reach out any time for topics you might like to be covered, here or on Twitter.

Disclaimer: None of this is meant to be financial advice. I’ve lived and worked in crypto since 2017 and I aim to merely educate people on the upsides and downsides of all sorts of projects and the market itself. Additionally, I’m a student just as all of us are. Therefore, my thoughts on projects evolve naturally over time as I learn more about them. Last but not least, none of these posts represent the thoughts of NBX unless otherwise stated and this includes all posts that preceded this one.

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