Exploring Uniswap V2/V3

Case Study: Analyse Uniswap's user acquisition, retention and behaviour.

Scenario

In your role as a Uniswap operations team member, your task is to study Uniswap v2 and v3 for improved platform efficiency and user experience. Your primary focus turns to on-chain data, where you analyze metrics such as transaction counts and liquidity pool sizes to assess popularity and utilization. Key priorities involve interpreting user sentiment and preferences through on-chain data. With a grasp of user profiles, your insights aid the operations team in aligning the platform with user needs, ensuring Uniswap maintains its leadership in decentralised finance.

Problem Statement

Using on-chain data, improve the team's ability to decipher user behaviour/patterns and track operational data.

User Acquisition/Behaviour

The transition from Uniswap v2 to v3 was not about abandonment but evolution. Users explored the innovative features of v3 while maintaining a presence in v2. We evaluate the user base, and how their strategies adapt based on the unique features each version offered.

Operations

Uniswap v3 introduced a new set of smart contracts, which data now included information on liquidity concentration, position management, and innovative token pair creation. Using on-chain data, we may then evaluate the operating performance of Uniswap v2 and v3.

Method

You create 3 dashboards on Orus, each with purposes as described below.

User Acquisition

For each Uniswap versions, we may run these queries.

• User retention ‘funnel’: Compares the number of active users over different timeframes

  • User retention (proxy): Active users (90D) / Active users (180D) → [ETH]C [UNISWAPV2]APP ACTIV_90D / [ETH]C [UNISWAPV2]APP ACTIV_180D G 180D

  • User retention (proxy): Active users (30D) / Active users (90D) → [ETH]C [UNISWAPV2]APP ACTIV_30D / [ETH]C [UNISWAPV2]APP ACTIV_90D G 90D

  • User retention (proxy): Active users (7D) / Active users (30D) → [ETH]C [UNISWAPV2]APP ACTIV_7D / [ETH]C [UNISWAPV2]APP ACTIV_30D G 180D

• New users: New user count by day → [ETH]C [UNISWAPV2]APP NEW G 180D

User Behaviour

For each Uniswap versions, we may run these queries.

• TX count: Global count of version-specific transactions → [ETH]C [UNISWAPV2]APP TXC G 180D

• Swap/deposit/withdrawal volume: Comparison of swap volume, and supply volumes (deposit and withdrawal volume); insights on token inflow/outflow → [ETH]C [UNISWAPV2]APP SV G 180D, [ETH]C [UNISWAPV2]APP DV G 180D, [ETH]C [UNISWAPV2]APP WV G 180D

• Average swap activity: Swap count per user; may indicate presence of bots and market efficiency → [ETH]C [UNISWAPV2]APP SC / [ETH]C [UNISWAPV2]APP USC G 180D

• Deposit/withdrawal count: Deposit count, withdrawal count → [ETH]C [UNISWAPV2]APP DC / [ETH]C [UNISWAPV2]APP WC G 180D

Operations

For each Uniswap versions, we may run these queries.

• Pool count: Pool count → [ETH]C [UNISWAPV2]APP PC G 180D

• New pools: New pools → [ETH]C [UNISWAPV2]APP NPC G 180D

• Average gas fees: Average gas fees used by related operations → [ETH]C [UNISWAPV2]APP AGFEE G 180D

• TVL: Liquidity → [ETH]C [UNISWAPV2]APP L AGG[APP] G 180D

You can now answer these questions by looking at the charts described above:

• How does the trend of Uniswap v2 and v3 active users compare?

• Is any of the platforms stopping to draw new users? If so, figure out what feature made the difference

• Is there any significant difference in activity level across the two versions?

• How active are the average swapper in each version? (note: bots are usually very active)

• Are tokens flowing out of/into the platforms?

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Resources

Decentralised exchanges (DEXs) have been an important driver of the DeFi revolution, and the addition of Uniswap v3 on top of Uniswap v2 filled the ever-innovative industry with anticipation. Let's explore the distinctions between these versions and their impact on the decentralised exchange landscape.

Uniswap v2

Uniswap v2 - a successor to Uniswap v1, a pioneer in the automated market maker (AMM) space - laid the foundation for decentralised trading on Ethereum. Launched in August 2020, its simplicity and user-friendly interface attracted a diverse range of liquidity providers and traders. With its fixed-price curves and familiar trading pairs, Uniswap v2 became a go-to for many navigating the DeFi landscape.

In Uniswap v2, liquidity providers deposited assets into pools, determining the price based on a constant product formula. The straightforward design facilitated broad token availability, but its limitations became apparent in terms of capital efficiency. Uniswap v2's AMM model is simple, but as the DeFi space evolved, comes the demand for more sophisticated features.

Uniswap v3

In May 2021, Uniswap v3 emerged as a leap in decentralised trading, introducing concentrated liquidity and capital efficiency features. This version allowed liquidity providers to define price ranges within which their assets would be traded, optimising capital deployment for more targeted and efficient trading.

With Uniswap v3, liquidity providers could concentrate their assets within specific price ranges, enhancing capital efficiency. This innovation provided users with an alternative to Uniswap v2's broad liquidity distribution.