Yield farming frenzy pushes Uniswap daily volume over $1 billion

A dramatic spike in yield farming activity associated with SushiSwap and similar protocols has seen Uniswap become the first decentralized exchange (DEX) to exceed $1 billion in 24-hour trade volume.

According to crypto data aggregator CoinGecko, Uniswap V2 is currently the third-largest exchange by normalized trade volume with $1.02 billion worth of ERC-20 tokens changing hands over the past day.

CoinGecko ranks Uniswap below only Binance and OKEx, who represent $6.25 billion and $1.10 billion in daily trade respectively. The decentralized exchange is now beating out major centralized platforms like Coinbase Pro, Huobi Global, and Bitfinex.

The boom in yield farming has also seen Uniswap suddenly emerge as the top decentralized finance (DeFi) protocol by locked funds with $1.69 billion — representing 18.05% of the total value locked in the sector’s smart contracts according to DeFi Pulse.

However, analysts are predicting that Uniswap’s dominance may be short-lived, with rival forks offering extreme incentives to liquidity providers rapidly proliferating in recent weeks.

SushiSwap, an unaudited fork of Uniswap, has already attracted $1.47 billion in locked funds through what many are describing as a ‘vampire attack’ designed to suck liquidity from Uniswap.

Rival platforms offer extreme incentives to yield farmers to stake LP tokens — the tokens provided to liquidity providers on Uniswap — on their platform, migrating liquidity from the leading DEX. As a consequence, LP tokens farmed on SushiSwap currently representing more than 72% of the total funds locked on Uniswap.

SushiSwap is not the only platform seeking to siphon Uniswap’s liquidity, with similarly unaudited Uniswap forks such yuno.finance, Hotdogswap, pizzafinance, and Kimchi enticing yield farmers with purported returns that sometimes exceed millions of percent. Despite quickly attracting attention, Hotdog’s native token plummeted from $4,000 to $1 over just five minutes earlier today.

Uniswap is also set to face increasing competition from decentralized exchanges targeting the tokens of rival networks, including the forthcoming Polkaswap platform.

The Tron (TRX)-affiliated JustSwap platform also recently emerged as the second-largest DEX with roughly $200,000 in daily trade according to CoinGecko. However, some analysts believe JustSwap’s volume may be inflated through wash-trading, artificially bolstering its rankings.