DeFi gathering momentum, Ethereum Gas Fees Rising: Why Is Uniswap (UNI) Stuck?
November 21 2023 - 6:00PM
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Decentralized finance (DeFi) activity on Ethereum is picking up
momentum based mainly on how gas fees have been trending in the
first three weeks of November, data from Kaiko shows. Even so,
despite Uniswap (UNI) spearheading the revival, looking at the gas
attributed to its activities over this period, UNI prices remain
stagnant below $5.6, with bulls failing to edge higher, breaking to
new 2023 highs. Ethereum Gas Fees Rising, DeFi Revival? According
to Kaiko, a blockchain analytics platform, the average gas fees on
Ethereum hit multi-month highs last week. The platform expressly
notes that the primary driver has been Uniswap’s activities,
reading from the rising transaction volumes from meme coins,
including GROK. This, in turn, pushed block space demand higher,
increasing gas fees. Related Reading: Global Banks Are Betting Big
On XRP, Report Shows Gas fees remain volatile but generally higher
in the first three weeks of November. As of November 20,
Ycharts data shows that the average cost of sending a
transaction stood at 45.13 Gwei, nearly 100% from November 19, when
it was at 24.84 Gwei. This is a significant jump from 17.66 Gwei in
late October 2023. Gas fees and how ETH and DeFi token prices react
are directly correlated as DeFi and other on-chain activities like
non-fungible token (NFT) minting and trading rise; gas fees usually
expand in trending markets. Accordingly, the recent expansion in
gas fees could suggest that the markets could be preparing for a
leg up, and tokens of critical protocols, including Uniswap or
Aave, could benefit. DeFi TVL Rising, But Uniswap Is Stuck Below
$5.6 As of writing, the total value locked (TVL) across all DeFi
protocols stands at over $46.6 billion as of November 21, according
to DeFiLlama. This increase is nearly $5 billion more than in
early November and up from $37 billion in mid-October.
Ethereum remains a choice platform for deploying DeFi apps despite
the relatively gas fees pinned to mainnet scaling challenges. The
pioneer smart contract blockchain manages $25.4 billion in TVL,
whereas Uniswap is one of the largest protocols with $3.216 billion
in TVL. UNI prices are up 30% from mid-October when writing on
November 21. However, bulls have been unable to break above the
November highs at around $5.6. From the daily chart, trading
volume, and thus participation, has been tapering even though
prices have been edging higher. Related Reading: Shiba Inu
Sees A Whopping 48,000% Increase In The SHIB Burn Rate, What’s
Next? This formation suggests that the uptrend was behind low
momentum and sustainability. Technically, there could be more gains
if there is a solid close above November highs with expanding
volumes. In that case, UNI could expand, retesting 2023 highs of
around $7.2. Feature image from Canva, chart from TradingView
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