First things first, a DEX is a decentralized exchange which allow users to easily interact and trade between crypto assets and provide liquidity to earn fees. Everybody knew the famous Uniswap which is the first DEX ever and later on many others swap got fork from uniswap. In conjunction with Terraswap, it is the largest and most active DEX on terra blockchain. This article will briefly compare both AMM DEX stats and look into their future. We are using Flipside Crypto data to compile this report.
Total Value Locked (TVL) Uniswap vs Terraswap
To ease our visualization we only compute TVL for uniswap v3 and terraswap. The TVL gap between uniswap and terraswap begin move away starting August as more and more liquidity being provided on uniswap. Currently the TVL of terraswap is sitting at 40% of uniswap but both showing increasing trend in TVL which is essential for a DEX. A DEX should have an increasing TVL for ease of converting one assets to the others without higher slippage. In the future outlook we expect both TVL will continue to increase.
Nevertheless, let’s take a look into TVL on all ecosystem. Ethereum currently sitting at top with 129 billion TVL while Terra only has 7 billion. In comparison to the DEX, Terraswap consists of 1/7 ratio of TVL on Terra ecosystem while uniswap only consists of 2/129 ratio of TVL on ethereum blockchain. We would say this is a good things for Terra as more liquidity is concentrated on the largest DEX and not diversified to any other fork of swap like what is on ethereum. However in future when more and more protocol introduced on Terra, a lot of new AMM DEX will pop up and trying to compete for the liquidity on Terra. Currently Terraswap does not has any token related and this is the chance for other AMM DEX to introduce their governance token to boost strap their liquidity.
LP on Uniswap vs Terraswap
Next we will look into the daily liquidity added on both DEX. The reason of why TVL of uniswap does not showed as top is the because of their LPs. Uniswap LPs are more active in adding and withdrawing the liquidity to spot for others opportunities. Unlike uniswap, Terraswap LPs tend to be more passive and less aggressive in providing the liquidity. From the amount of liquidity being added, we can say most of the LPs on uniswap is WHALE, and LPs on Terraswap contain more retailers. Daily liquidity being added on uniswap gone up to 1.5 to 2 billion a day, while the maximum for terraswap is less than 50 million.
Next we compute and count the number of unique users who provide liquidity on uniswap and terraswap. The declining of unique users who provide on uniswap also contributing to the reason of low TVL ratio of uniswap to entire ethereum blockchain. On the other hand, we can see the number of unique users on Terraswap are increasing. This is encouraging as more and more users particapate on Terra which may due to the update of Col-5. But still, the volume of liquidity provided on uniswap is way too large compared to terraswap with their way lesser LPs who provide liquidity. With this inversely proportional chart of unique LPs on uniswap and terraswap, we anticipate WHALE from ethereum will bridge over and provide liquidity over terra.
Swap Stats of Uniswap vs Terraswap
Lastly we compare the stats of swap between uniswap and terraswap. Despite the low TVL ratio of uniswap vs entire ethereum blockchain, it has active and consistent trades and swaps over there. The daily volume over uniswap is nearly 100x of terraswap. This is also the reason of why whales want to put all their tokens for the liquidity. Remember more trades= more fees generated. A DEX with less trades will fail and discourage LPs in providing their tokens which needed them to bear with impermanent loss. On the bright side, both DEX has daily active and consisten transactions of swap. Still the transactions count of uniswap is 10x to 50x over terraswap.
We will also need to compute the daily unique traders over uniswap and terraswap. Number of traders on uniswap is nearly 4 to 8x of terraswap. From the previous chart of unique numbers of LPs, we will simply compute out the ratio of LPs and traders
Ratio of traders/ LPs of uniswap = 10k / 500 = 200 unique traders per LP
Ratio of traders/ LPs of terraswap = 2000 / 1000 = 2 unique traders per LP
The ratio for uniswap is consider healthy and ratio of terraswap is at risk and dangerous. Recall that a DEX should be a tools which ease users in exchanging their assets. With this low number of traders and LPs, higher slippage will occur and lesser fees will be generated, and this low fees will eventually be persuasive for LPs to provide liquidity on others DEX which has consistent and higher fees generated. (In theory).
However, users on Terraswap tend to stay with terra and make the TVL of terraswap comparable to uniswap.
In conclusion, Terraswap as the most active AMM DEX on Terra is showing progress and will evolve into another state. It has comparable TVL to uniswap and has way more liquidity providers over uniswap. The things to improve for Terraswap is the number of daily active traders and users. Like what we said, a DEX that is sustainable must has more traders on the platform and that is why we can see all the exchange out there are doing promotion to attract traders over to trade.
Data: Flipside Crypto
Compiler : Ah Kek