Uniswap

Uniswap v4 launched in late 2024 and processed over $110 billion in trading volume within its first 177 days, achieving $1 billion in Total Value Locked (TVL) faster than v3's comparable period. The protocol holds $4.5 billion in liquidity across chains, with 72% now on Layer 2 networks. Yet Uniswap's market dominance fell from roughly 50% to 18% over the past year—not from failure, but from ecosystem proliferation.

Uniswap operates as an automated market maker (AMM), replacing order books and market makers with algorithmic liquidity pools. Instead of matching buyers and sellers, users trade against pooled assets. Liquidity providers deposit token pairs (e.g., ETH-USDC), earning fees from each trade. The pricing formula is simple: x * y = k (constant product), which automatically adjusts prices as supply shifts. No central authority sets prices; they emerge from the algorithm and trading activity.

The biological model is chemical equilibrium in cellular metabolism. When enzyme concentrations shift, reaction rates adjust automatically to maintain balance. Uniswap's pools function identically: high demand for ETH raises its price relative to USDC, incentivizing arbitrageurs to restore balance. The system self-regulates through economic incentives, not oversight.

What makes Uniswap's dominance decline notable is competitive exclusion dynamics in reverse. The protocol pioneered AMMs in 2018, but success attracted imitators. Curve Finance optimized for stablecoin swaps. Balancer enabled multi-token pools. PancakeSwap captured Binance Smart Chain liquidity. The DEX market went from 2-3 protocols capturing 80% of fees to ten protocols collectively holding that share by 2025. Uniswap still leads in absolute volume ($6.7 billion weekly in mid-2025), but the ecosystem fragmented as competitors found specialized niches.

On December 26, 2025, Uniswap DAO voted to activate a "fee switch" and burn $600 million in UNI tokens—extracting value for token holders from accumulated protocol fees. This shifts the protocol from pure public infrastructure to value-accruing asset, changing the organism's energy allocation from pure growth to redistribution. It's a phase transition: from land-grab expansion to mature ecosystem harvesting.