Crypto’s Top Decentralized Spot Market Aims to Dominate Web3

(Bloomberg) -- Uniswap Labs, the main developer of the biggest decentralized exchange for spot-market cryptocurrency trading, is launching computer code that can embed its capabilities into any website, a step that could expand its growth.

The so-called swap widget, which can be added by pasting in a line of code, will let OpenSea users swap various tokens without leaving the web site that runs it. The widget will also be initially available on the sites Oasis.app and Friends With Benefits. 

PayPal Holdings Inc. used such a tactic decades ago to expand its reach and spur the growth of online commerce, said Richard Crone, the head of Crone Consulting LLC. In the cryptocurrency industry, however, such widgets are less pervasive, with Coinbase Global Inc. among those that provide them for certain functions. 

“We believe that value exchange is essential to Web3,” which is a slew of apps using tokens and blockchains, Mary-Catherine Lader, chief operating officer at Uniswap, said in an interview. “To grow, we have to grow the whole market.”

Since the start of 2021, Uniswap’s total value locked -- a measure of how much money has been put into its platform -- has grown by more than 200% to $7.8 billion, according to researcher CryptoCompare. But by that metric, its market share on Ethereum has dropped from 12.4% at the start of 2021 to 6.4% as financial apps like Curve and Aave expanded, said David Moreno Darocas, a research analyst at CryptoCompare.

Uniswap protocol’s software upgrade last year has allowed users to trade more volume with less capital. The protocol, which is distinct from Labs, has 74% share of Ethereum decentralized-exchange trading volume, per Dune Analytics.

The widget is a key part of Uniswap’s growth strategy, which recently lead to the company’s launch of a venture arm to invest in Web3 startups. Uniswap has also been expanding onto other blockchains, such as Polygon, and is quickly gaining traction there.

Uniswap Chief Executive Officer Hayden Adams founded the New York-based decentralized exchange after losing his job as a mechanical engineer at Siemens AG in 2017. Since then, Uniswap has come to dominate decentralized spot trading on Ethereum, with only dydx, which focuses on crypto derivatives, having higher trading volumes, according to CoinMarketCap. Currently, Uniswap’s trading volume is similar to FTX, a major centralized spot exchange, according to CoinMarketCap.

Unlike most traditional crypto exchanges, Uniswap protocol doesn’t charge issuers to list new tokens, generating revenue instead through transaction fees that go to liquidity providers.

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