DeFi Report founder Michael Nadeau concluded that Uniswap’s upcoming Layer 2 solution, Unichain, could bring more value to Uniswap Labs and its token holders.
On October 14 x publicationMichael Nadeau, founder of DeFi Report, stated that Uniswap The latest layer 2 solution from the laboratory, Unichaincould potentially earn them nearly $500 million a year in settlement fees that would otherwise be paid to the Ethereum network.
He explained that the protocol will no longer have to pay a $368 million settlement fee to Ethereum (ETH) validators once they launch Unichain. Instead, the funds will go to Uniswap Labs and most likely UNI (UNI) token holders.
In addition to settlement fees, Uniswap could potentially profit by staking the maximum extractable value, which is the maximum value that miners or validators can obtain by reorganizing and reordering transactions waiting to be added to the blockchain.
Because Uniswap owns all the validators on the Unichain network, Nadeau predicts that MEVs will no longer go into the pockets of Ethereum validators. Thus, an estimated $100 million is added to Uniswap’s annual revenue, based on last year’s MEV percentage data.
“MEV is estimated to represent around 10% of the total fees paid on Uniswap ($100 million over the last year). You will also have the option to share some of this with token holders,” Nadeau wrote in his post.
Nadeau also noted that last year Uniswap generated $1.3 billion in trading and settlement fees on five of its main chains: Ethereum, Optimism, BNB Chain, Base and Polygon. Unfortunately, none of the funds went to the protocol or its token holders.
With the launch of Unichain, Ethereum validators could lose a large portion of the $368 million they would receive in settlement fees paid by Uniswap. Not only that, ETH token holders could also be negatively affected due to the protocol burning less ETH and the settlement fee allocation going to UNI token holders.
“At the end of the day, Uniswap is simply being integrated within the technology stack so they can control more of the value they are creating through their interface and smart contracts,” Nadeau said.
In September 2022, Ethereum co-founder, Vitalik Buterin He criticized the idea of Uniswap creating a Layer 2 blockchain. He stated that a Uniswap chain or rollup doesn’t make sense to him because it contradicts Uniswap’s selling point.
“The main value proposition of Uniswap is that you can make a trade in 30 seconds without thinking about it. A Uniswap chain or even a rollup makes no sense in that context,” Buterin said in a x publication.
On October 10, Uniswap Labs announced its plans to introduce a new open source Ethereum-based Layer 2 network called Unichain. In a press release shared with crypto.news, Uniswap Labs explained that the Optimism-powered project will address scalability challenges that have hindered the broader adoption of Ethereum.
At the time of writing, the Layer 2 solution is available on a live private testnet and a public mainnet launch is scheduled for later this year.
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