Bearish for ETH: Unichain Launch Damages Ether's Value, Experts Say
2024-10-11

Uniswap (UNI), once the largest EVM ecosystem decentralized exchange, announced the upcoming release of its own network, Unichain. This step will heavily affect the tokenomic processes for ETH and put its value in danger since Uniswap will use a different fee mechanism once it migrates to the native protocol.
ETH might be in danger as Uniswap launches its own chain: Expert
Uniswap's (UNI) decision to introduce native blockchain network Unichain is yet another reason to be bearish on Ether ETHUSD in 2024, DeFi researcher and educator Wajahat Mughal writes on X. As Uniswap (UNI) will be able to yield some classes of fees on the new chain, ETH's economics and network activity will be in danger.
Unichain is another confirmation of $ETH being a bearish asset in 2024🩸
Today we learnt news about @Uniswap's next steps moving from not just the application layer, to now a rollup as part of the @Optimism superchain.
Why would Uniswap want to be a chain?
When transacting on… https://t.co/AOYrHaOBdV pic.twitter.com/GynKa0pa33— Wajahat Mughal (@0xMughal) October 10, 2024
Namely, once Uniswap (UNI) moves to its own chain, it will be able to capture transaction fees (gas) and MEV fees. Both revenue streams will definitely be substantial, even given the fact that the exact share of operations moving from Ethereum ETHUSD to new blockchain is yet to be seen.
As such, Ethereum's ETHUSD network activity will also decline which, in turn, will affect the rate of ETH's token burn, besides direct rerouting of fees to the Uniswap (UNI) team.
Uniswap's (UNI) expected migration to its native blockchain undermines Ethereum's ETHUSD promises as an asset in every possible way, expert admits:
If the number 1 DeFi app when it comes to revenue is now deciding to leave and take control of this revenue for itself, it opens an interesting discussion of where this leaves ETH today. Reduced L1 activity, reduced GWEI, reduced cash flow and importantly, ETH is not ultrasound money.
Ethereum ETHUSD, the second largest cryptocurrency, is changing hands at $2,416, up 0.56% in the last 24 hours on major spot exchanges.
Ethereum ETHUSD needs new narratives to replace "Ultra Sound Money"
The narrative of Ether as "Ultra Sound Money" (an asset that is deflationary by default after EIP 1559 activation) is said to be vanishing.
As covered by U.Today previously, a number of experts indicated that its sustainability is threatened by the low transactional volume on Ethereum ETHUSD mainnet.
More and more protocols moving from Ethereum's L1 might form a "deadly spiral" for this metric. 
Since April 2024, Ethereum's ETHUSD supply is surging again. In Q2-Q3 2024, the asset logged its longest inflationary period since migration to PoS consensus in September 2022.