Uniswap L2 Launch: A Strategic Move to Capture Value

Uniswap, the leading decentralized exchange (DEX) commanding approximately 25% of the total DEX market share, has recently launched its own Layer 2 solution called Unichain. This strategic move represents a significant shift in how the protocol manages its economic value and could reshape the dynamics between decentralized exchanges and their underlying blockchain infrastructure.

Figure 1: Share of DEX Volume

Source: AMINA Bank, The Block

To appreciate the significance of this move, it’s crucial to understand Uniswap’s existing fee structure, which comprises multiple layers:

1. User Interface Fee (0.15-0.25%): Collected by Uniswap Labs when users trade through their web interface
2. Liquidity Provider Fee (0.01-0.1%): Distributed to liquidity providers who supply assets to the protocol
3. Transaction Fee: Base Ethereum network fee that gets burned
4. Priority Fee: Optional fee paid to Ethereum validators for faster transaction processing
5. MEV (Maximum Extractable Value): Additional value that validators can extract through block ordering

The current structure reveals a striking imbalance: While Uniswap Labs generated approximately $100 million in UI fees during 2024, Ethereum validators earned about $400 million from Uniswap-related transactions. Perhaps most notably, UNI token holders received no direct value from these fees.

Figure 2: Trading Volume on Uniswap (dominated by Ethereum)

Source: AMINA Bank, Defillama

Uniswap’s L2 solution addresses several key challenges:

Economic Efficiency

• 95% reduction in transaction fees
• Sub-second transaction finality (compared to Ethereum’s 13-second blocks)
• Retention of value within the ecosystem instead of losing it to base layer costs

Competitive Positioning

• Maintains support for 30+ blockchain networks where Uniswap is currently deployed
• Preserves market share against competitors like Pancakeswap and Raydium
• Offers enhanced features and addresses liquidity fragmentation

New Fee Distribution Model

Unichain introduces a reformed fee structure:

• 20% allocated to Uniswap Labs (replacing the previous UI fee)
• 2.5% of gross revenue or 15% of net revenue (whichever is greater) to Optimism Collective
• Remaining fees directed to Unichain sequencers, with plans to decentralize through UNI staker participation

The launch of Unichain is expected to have several significant market impacts:

For UNI Token

• Increased demand for UNI staking opportunities
• Potential price appreciation due to enhanced utility and fee-earning potential
• Greater alignment between protocol value and token holder benefits

For Ethereum

• Reduced ETH burning from Uniswap transactions
• Possible inflationary pressure on ETH supply
• Decreased validator revenue from Uniswap transactions

For Uniswap Exchange

• Maintained market dominance through multi-chain support
• Enhanced user experience with faster, cheaper transactions
• Improved value capture for the protocol and its stakeholders

Uniswap’s L2 launch follows a broader trend of major protocols launching application-specific or general-purpose L2 solutions, as seen with Kraken’s Ink and Coinbase’s Base. However, Uniswap’s approach differs from predecessors like dYdX, which completely migrated away from Ethereum. By maintaining multi-chain support while introducing its L2, Uniswap appears to be pursuing a more balanced strategy that could set a new standard for how DeFi protocols evolve.

This move represents a crucial step in the maturation of decentralized exchanges, demonstrating how protocols can adapt their infrastructure to better serve users while creating sustainable economic models. The success of Unichain could influence how other DeFi protocols approach the challenge of balancing network costs, user experience, and value capture in the future.

Disclaimer – Research

This document has been prepared by AMINA Bank AG (“AMINA”) in Switzerland. AMINA is a Swiss bank and securities dealer with its head office and legal domicile in Switzerland. It is authorized and regulated by the Swiss Financial Market Supervisory Authority (FINMA).

This document is published solely for educational purposes; it is not an advertisement nor is it a solicitation or an offer to buy or sell any financial investment or to participate in any particular investment strategy. This document is for distribution only under such circumstances as may be permitted by applicable law. It is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or would subject AMINA to any registration or licensing requirement within such jurisdiction.

No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained in this document, except with respect to information concerning AMINA. The information is not intended to be a complete statement or summary of the financial investments, markets or developments referred to in the document. AMINA does not undertake to update or keep current the information. Any statements contained in this document attributed to a third party represent AMINA’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party.

Any prices stated in this document are for information purposes only and do not represent valuations for individual investments. There is no representation that any transaction can or could have been effected at those prices, and any price(s) do not necessarily reflect AMINA’s internal books and records or theoretical model-based valuations and may be based on certain assumptions. Different assumptions by AMINA or any other source may yield substantially different results.

Nothing in this document constitutes a representation that any investment strategy or investment is suitable or appropriate to an investor’s individual circumstances or otherwise constitutes a personal recommendation. Investments involve risks, and investors should exercise prudence and their own judgment in making their investment decisions. Financial investments described in the document may not be eligible for sale in all jurisdictions or to certain categories of investors. Certain services and products are subject to legal restrictions and cannot be offered on an unrestricted basis to certain investors. Recipients are therefore asked to consult the restrictions relating to investments, products or services for further information. Furthermore, recipients may consult their legal/tax advisors should they require any clarifications.

At any time, investment decisions (including whether to buy, sell or hold investments) made by AMINA and its employees may differ from or be contrary to the opinions expressed in AMINA research publications.

This document may not be reproduced, or copies circulated without prior authority of AMINA. Unless otherwise agreed in writing AMINA expressly prohibits the distribution and transfer of this document to third parties for any reason. AMINA accepts no liability whatsoever for any claims or lawsuits from any third parties arising from the use or distribution of this document.

Research will initiate, update and cease coverage solely at the discretion of AMINA. The information contained in this document is based on numerous assumptions. Different assumptions could result in materially different results. AMINA may use research input provided by analysts employed by its affiliate B&B Analytics Private Limited, Mumbai. The analyst(s) responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting market information.  The compensation of the analyst who prepared this document is determined exclusively by AMINA.