Cryptocurrency users may have been surprised to find out that the automated market maker (AMM) protocol Curve Finance was recently exploited, resulting in a supply shock of another token in the space, Uniswap’s UNI token. But how has the stream of news affected the crypto futures market? A closer look reveals an intriguing result.
1. Uniswap’s UNI Token Gains Bias Due to Curve Finance Exploit
The UNI Token recently gained attention due to an exploit related to Curve Finance. The decentralized exchange protocol Uniswap created the UNI token to act as its native governance token. Soon after its launch, a flaw in the protocol was identified by a security researcher who put a flash loan exploit in Curve Finance into practice.
The exploit caused a rapid increase in the UNI token’s value. This increase was fueled by what is known as a ‘short squeeze’. A short squeeze occurs when a large number of traders take short positions in a crytocurrency. This causes it to become ‘expensive’, and traders who took short positions are forced to cover their losses.
The rapid gain in value of the UNI token due to this exploit presents an interesting conundrum for Uniswap. While the increase was caused by a bug, it’s natural to expect a price increase for UNI after its initial launch as it is now gaining traction in DeFi markets. This increase was thus, caused by both market forces and the exploit.
2. Market Demonstrates Preference for UNI Token After Exploit
The UNI token has become a target of investing and trading following the September 18th exploit on the decentralized finance platform Uniswap. This exploit was detected by a user on the same day and resulted in the creation of nearly two million non-existent UNI tokens. The incident has shed light on the great potential of the token.
Since then, the digital asset has been in the limelight seeing investors and traders coming-in. According to data from CoinMarketCap, UNI’s ROI is over 630% for it’s all-time high of $ 11.37. Moreover, two of UNI’s largest investors, Compound and Aave, have secured more than 10% of the tokens to date.
According to the numbers, the UNI token has seen increased interest, as it ranked 42nd in terms of liquidity volume, and 8th in daily trading volume, with roughly $ 3.3 billion and $ 1.29 billion respectively. It’s worth mentioning that major exchanges like Binance and Coinbase, have listed the UNI token, indicating the rally in customer sentiment.
- The exploit occurred on 18 September 2020
- UNI’s ROI is 630% for its all-time high
- Compound and Aave have secured 10% of the tokens to date
- UNI is ranked 42nd in terms of liquidity volume and 8th in daily trading volume
- Major exchanges like Binance and Coinbase have listed the UNI token
3. Market Seemingly Forges Higher Appreciation for Uniswap’s UNI Token
The UNI token from Uniswap has recently seen a surge in market appreciation, with user numbers skyrocketing and its market capitalization rising from $175 million to over $1.1 billion in only three months.
Ever since its launch in September 2020, it’s been a steady march higher for UNI, with its launch day price of $2.62 climbing as high as $43.98 in September 2021. The token’s impressive rise has been driven by several factors:
- Increased Use and Recognition: Uniswap’s rise has been driven by an increase in usage, with over $6 billion in Ethereum traded on the platform in September. With the popularity of Uniswap increasing among traders and users, the UNI token has seen more recognition as a legitimate asset.
- Attractive Governance Model: The UNI token is used to control Uniswap and for governance decisions. Its decentralized governance model, in which UNI holders can vote on major decisions, has attracted more traders and investors.
- Increased Demand: The UNI token’s surge has been driven by increased demand from traders and investors who see the token’s potential. As the platform’s usage increases and more traders and investors move in, UNI’s demand rises as well.
The UNI token has seen remarkable market appreciation in the last few months and its rise seems to be continuing. With increased usage, recognition, a strong governance model and increased demand, the token’s future looks brighter than ever.
The UNI token is a ground-breaking asset, proving just how much potential the cryptocurrency market has to offer. It is clear that its potential has been further highlighted by the recent exploits in Curve Finance, resulting in a bias for UNI futures. With such a strong market reaction to UNI, it is safe to say that we will see more potential uses of the token as blockchain and cryptocurrency capabilities continue to develop.