The crypto market is filled with different types of investment opportunities for all to consider, ranging from currency-focused units, to Layer-1 networks upon which applications are built, to application-specific projects like Uniswap (CRYPTO: UNI) that allow investors and traders to buy and sell cryptocurrencies on a decentralized exchange.
In fact, Uniswap is the largest decentralized exchange globally, serving millions of customers and facilitating an incredible number of transactions along the way. The project's core token, UNI, facilitates transactions on this decentralized trading protocol, allowing for much more efficient trading than traditional exchanges, in many respects.
However, there are some key problems with using Uniswap that users have bemoaned for some time. The Uniswap team has resolved one of these key issues over the past week. Since Friday close last week, Uniswap's native UNI token has declined 7.2% at 3 p.m. ET, making this one of the bigger, large-cap token decliners over this time frame.
Let's dive into what specific driver is moving this token higher today.
Permissionless bridging now coming to Uniswap
This week, Uniswap Labs (the company behind Uniswap) announced that permissionless bridging will now become a feature users can utilize on its network. This feature will allow swaps to be made across multiple blockchains directly from the Uniswap network, with nine networks, including Ethereum (CRYPTO: ETH), Polygon (CRYPTO: MATIC), Arbitrum (CRYPTO: ARB), and Base among the networks that will be directly connected with Uniswap. At the time of launch, only stablecoins and the native tokens of these networks will be available for bridging, though it's expected this functionality could be expanded over time.
These new bridging capabilities are powered by Across Protocol, which expects an average fill time of around three seconds for Ethereum and stablecoin transactions moving forward. Such speed and efficiency are what many traders have been clamoring for, and it will certainly be interesting to see how these newfound capabilities will impact transaction volumes on Uniswap moving forward.
A catalyst worth watching
In my view, this announcement of in-app bridging for the Uniswap protocol is significant. Users have requested this functionality for some time, and with the ability for traders to utilize cross-chain swaps, I would expect transaction activity to pick up significantly. The degree to which revenues increase to the protocol and are used to compensate investors via greater token burn or an eventual return of capital remains unclear. But this is certainly a step in the right direction for Uniswap, which is competing against a myriad of other players looking to take market share in the decentralized exchange space.
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Chris MacDonald has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum, Polygon, and Uniswap Protocol Token. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
