Is Ethereum's Largest DApp Going Independent?

Is Unichain Really a "Defection" from Uniswap?

According to official information, the launch of Unichain aims to address several challenges faced by DeFi, including cost, efficiency, and the need for seamless cross-chain exchanges amid liquidity fragmentation. In simple terms, the Uniswap team intends to enhance user experience and strengthen product competitiveness by establishing a unique Layer 2 network.

Opinions on this initiative vary widely. While there are positive assessments, controversial voices, including those from Vitalik Buterin, have emerged. As early as 2022, Vitalik expressed his opposition to the concept of Unichain on social media, noting, "The main value of Uniswap lies in its ability to complete transactions within 30 seconds without much consideration. In this case, neither a Uniswap chain nor a rollup makes sense; only having a copy of Uniswap on each rollup holds value."

Overall, Vitalik and other critics argue that Uniswap should focus on its existing successful applications, as the most successful DeFi application should be deployed on the mainnet and various Layer 2 solutions, rather than diverting attention to developing a new chain (essentially reinventing the wheel). Notably, two years ago, Layer 2 solutions were not yet mature; had Unichain been proposed then, it might have been seen as an independent application chain rather than a Layer 2 chain, leading to stronger opposition from Vitalik and others in the Ethereum community.

In contrast to internal dissent within the community, some long-time skeptics of Ethereum appear to have found new arguments. They argue that Unichain signifies Uniswap's "defection" from Ethereum. Drawing from previous critiques of Layer 2 solutions draining Ethereum's resources, they suggest that as the DApp contributing the most to Ethereum's gas fees, Uniswap is poised to siphon away Ethereum's last income sources, resulting in decreased gas revenue and ultimately leading to its "death."

Clearly, the launch of UniChain has sparked widespread discussion not only within the Ethereum community but is also viewed as a challenge to Vitalik. However, compared to the internal discourse, the external FUD (fear, uncertainty, doubt) may stem from Ethereum's numerous adversarial relationships in recent years; the once-overlooked Layer 2 route has gradually attracted attention from larger firms and institutions. The success of Layer 2 has blocked the development paths of many cross-chain and high-performance public chains, allowing these projects to gain market space only in the event of stagnation in Ethereum's growth. This is one of the reasons for the frequent FUD surrounding ETH.

Uniswap founder Hayden Adams recently addressed the controversy, stating, "Zero-sum bias is a significant issue in the crypto community. Don't side with high fees; scaling through Layer 2 is beneficial for Ethereum."

Returning to the main topic, viewing Unichain as Uniswap's "defection" from Ethereum is essentially a misinterpretation. While it may appear that Unichain is developing a new Layer 2 chain, unlike the independent application chains like dYdX that have "migrated" to the Cosmos ecosystem, Unichain remains within the Ethereum ecosystem, with the Ethereum mainnet still being Uniswap's primary "battlefield." The majority of DeFi funds in the entire crypto ecosystem are concentrated on Ethereum, and large users tend to prioritize "security and stability." This is one of the reasons why Ethereum serves as an irreplaceable "fortress."

The interaction needs between Uniswap users and dYdX users are frequent and timely, making it advantageous for Uniswap to be early in deploying on the Ethereum network and rooted in its secure and stable ecosystem, establishing itself as a crucial infrastructure in DeFi.

It is foreseeable that in the future, Uniswap on the Ethereum mainnet will continue to attract more liquidity to meet the significant secure exchange demands of large users, while smaller, high-frequency trades may shift to Layer 2 solutions like UniChain.

To illustrate, imagine Ethereum as a vast farmers' market, with Uniswap being the busiest and most popular vendor. As business flourishes, Uniswap rents a separate storefront at the market entrance, providing a larger space and a more comfortable environment for customers, enhancing their shopping experience. The stall and the storefront cater to different customer needs.

Thus, the notion that Uniswap is "defecting" does not hold. Rather, it seeks to continue thriving within the Ethereum ecosystem.

Why UniChain Is Essential

Since the proposal of UniChain two years ago, Uniswap has faced a challenging decision. From the perspectives of Vitalik and some members of the Ethereum community, Uniswap has already achieved significant success, making further attempts seem unnecessary. However, from the viewpoint of the Uniswap community and development team, there are compelling reasons to launch UniChain, primarily reflected in the following aspects:

Optimizing Expansion to Address Challenges and Competition

Despite Uniswap's considerable success, it continues to face numerous challenges and competition in the future development of multi-chain ecosystems (including multiple Layer 2 solutions). Beyond the advantages of the Ethereum mainnet, several native DEX brands, such as PancakeSwap and QuickSwap, have already established market leadership on various Layer 2 and high-performance EVM chains. Additionally, existing liquidity fragmentation on Layer 2 has constrained Uniswap's effectiveness as a top-tier application. Choosing OP Stack as part of the Optimism Superchain is clearly a well-considered decision. Among the leading Rollups ranked by Layer 2 Total Value Locked (TVL), networks like OP Mainnet, Base, and Blast have aggregated over ten billion dollars in liquidity, with many native crypto teams and large enterprises, such as Sony, deploying here. The Superchain not only has ample funding and talent but also advantages in research and development pathways and technical sharing as a "homogeneous" chain, making it easier to resolve interoperability issues. Currently, Uniswap Labs is collaborating with OP Labs to achieve native cross-chain interoperability, address liquidity fragmentation between Layer 2 solutions, and provide a seamless cross-chain exchange experience. In summary, by deploying Layer 2 through OP Stack at a lower cost, Uniswap can join this development community, share technological advancements, accelerate Layer 2 interoperability, and tackle significant challenges such as liquidity fragmentation and MEV—issues that Uniswap could not directly influence in its previous role as a DApp.

An Inevitable Choice for a Growing DApp

As a DApp deployed on a public chain matures, it must consider its future development path. Beyond optimizing expansion, there is also internal demand from the community and pressure from token empowerment, which explains why the UNI token surged following the announcement of UniChain. In fact, as each DApp evolves from a small circle to a large community, even if the project team does not actively promote it, the community will compel progress. Furthermore, successful projects have strong revenue and technical reserves, making it a natural choice to break through bottlenecks and expand into new domains. For example, many shopping malls host well-known brands such as Uniqlo, Starbucks, and KFC. After initially capturing market share through their presence, these brands often develop their independent channels, such as official online stores or mini-programs. This allows them to own user data, conduct personalized marketing flexibly, and meet diverse customer needs. In the future, UniChain may uniquely share the liquidity of the Uniswap protocol, attracting more DeFi applications and creating a distinctive ecosystem, which is undoubtedly a promising vision.

Uniswap: The Freedom of the Ancients

In the crypto space, the values of openness and freedom are paramount. No underlying infrastructure should lock users and funds in the same way traditional finance does, and development teams should maintain flexibility. A multi-chain interoperable ecosystem remains the future; the decentralized Ethereum community will not forcibly lock users and funds, and maintaining free movement and a diverse application ecosystem is an inevitable trend. In such a free market, various products will succeed or fail through competition. Whether UniChain represents a major strategic move for Uniswap or a "trial run," it reflects the pursuit of mutual benefits by Uniswap Labs and the community.

Is It Good or Bad for Ethereum?

From the misinterpretation of ETH FUD, some believe that the launch of Unichain will accelerate Ethereum's decline. However, the reality is quite the opposite. The introduction of Unichain will not negatively impact Ethereum; rather, it will help address the cross-chain liquidity issues within the Ethereum ecosystem, thereby promoting its prosperity. This move will also encourage the widespread adoption of Layer 2 solutions, with more large enterprises, such as Sony, actively participating.

From another perspective, the launch of Unichain is inevitable. Although figures like Vitalik see it as an "unnecessary and inadvisable" action, this decision actually validates Ethereum's earlier choice of the Layer 2 route and showcases the foresight of the Ethereum development team. Without today’s successful and open Layer 2 solutions, these DApps might have opted for independent chains due to the unbearable gas fees and inefficiencies of Ethereum, ultimately leading to a genuine "defection" and potentially creating "Ethereum killers."

Currently, the Ethereum ecosystem is undergoing a process of self-innovation and transformation; today’s environment is no longer characterized by the expensive and slow transactions of the past. Applications deployed within the Ethereum ecosystem can enjoy more and better options while maintaining their original intentions, without compromising on decentralization for the sake of scalability and performance.

Conclusion

Regardless, we should respect the choices made by the Uniswap community and look forward to how UniChain can pave the way for a new future in the DeFi space, bringing more possibilities.

ETH FUD often focuses on the impact of Layer 2 on Ethereum's gas fees, but we should really consider one question: Is the value of Ethereum merely in collecting gas fees? Its true value lies in building infrastructure, implementing scaling solutions, deploying applications, and enhancing user experience—factors that continually drive innovation in the crypto space.

When Ethereum's gas fees soar, people say it's a negative sign; when Layer 2 solutions are proposed, some believe this direction will fail; and when Layer 2 successfully scales and gas fees decrease, they are accused of "bleeding Ethereum dry." As Uniswap’s founder has stated, the crypto community is rife with zero-sum bias; some skeptics may not have even delved deeply into Ethereum, merely opposing it from a differing stance. Therefore, it is crucial to conduct thorough research (DYOR) to avoid being misled.

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