Uniswap Labs (And Potentially $UNI Holders) Could Capture $368M in Settlement Fees from Ethereum Validators with L2 Blockchain Unichain
2024-10-14

Uniswap is preparing to launch its Layer 2 blockchain called Unichain, designed to enhance scalability for decentralized finance (DeFi) applications. Unichain is currently in the testnet phase and aims to address the high transaction costs and slow speeds commonly associated with DeFi operations on Ethereum. To achieve this, Unichain will feature rapid block times of one second and, in collaboration with Flashbots, will include 250 millisecond sub-blocks, creating the experience of nearly instant transactions. This new blockchain will be integrated into the Optimism Superchain, allowing for interoperability between Ethereum and other Layer 2 chains. 
Reminder:
Testnet is designed to create an experimental environment to test the reliability of the chain
Tokens swaps on testnet do not represent real assets and are not tradable outside of testnet
On October 13, Michael Nadeau, the founder of The DeFi Report, said on X that Uniswap had generated nearly $1.3 billion in trading and settlement fees across five chains over the past year, yet Uniswap Labs or UNI token holders have captured none of that value. According to Nadeau, 100% of the fees have gone to liquidity providers (LPs), Ethereum validators, MEV bots, and Layer 2 sequencers.
Nadeau noted that this dynamic will shift with the launch of Uniswap’s new Layer 2 blockchain, Unichain, designed to enhance scalability for decentralized finance (DeFi) applications, later in 2024. He emphasized that Uniswap Labs and UNI token holders will now be able to capture settlement fees, which previously amounted to $368 million going to Ethereum validators. Additionally, Nadeau highlighted that Uniswap will also capture Miner Extractable Value (MEV), estimated at $100 million, by owning the validators on Unichain.
Nadeau pointed out that LPs will continue to receive 100% of trading fees and may have the opportunity to participate in both settlement and MEV once Unichain is live. He mentioned that the winners of this move include Uniswap Labs, UNI token holders, and LPs, as they will benefit from the new settlement and MEV capture. Nadeau also identified Optimism as a beneficiary, given that it will receive a percentage of the settlement and MEV from Unichain.
On the other hand, Nadeau underscored that Ethereum validators and ETH holders stand to lose revenue from Uniswap’s shift, as less ETH will be burned, and validators will miss out on the $368 million in settlement fees. Similarly, he noted that sequencers from Layer 2 solutions like Arbitrum and Base will also be impacted by the loss of MEV and settlement fees to Unichain.
Nadeau summarized that Uniswap’s move to Unichain allows the protocol to gain control over more of the value it creates through its interface and smart contracts.
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