Is Uniswap (UNI) Price Extremely Undervalued?

Uniswap, the top DEX in Ethereum, is the most dominant. It commands a bigger market share, and UNI might be extremely undervalued according to crypto analysts – but is it true? Let’s dig in.

Uniswap, the leading decentralized exchange (DEX) on Ethereum, is known for its pivotal role in facilitating trustless token swaps. Despite its dominance, however, some crypto analysts believe that UNI, the native governance token of Uniswap, might be undervalued.

Uniswap's Impact on Ethereum Gas Fees and Liquidity Providers

Uniswap's contribution to the Ethereum network is evident in its role as a major generator of gas fees. As of early August, Uniswap accounted for about 71% of all Ethereum gas fees in the last month, generating over $1 billion in fees over the last year. These fees are distributed to liquidity providers who enable the protocol to operate trustlessly.

The dominance of Uniswap highlights the significance of the network, particularly as a fee-generating powerhouse within the Ethereum ecosystem. As a result, some analysts question whether UNI's market cap should be much higher, given the importance of Uniswap in making most Ethereum tokens liquid.

Uniswap's Pivotal Role in Ethereum's Layer-2 Swapping Operations

Uniswap plays a central role in powering most of Ethereum's and its layer-2 swapping operations. According to TokenTerminal data, Uniswap controls about 70% of the DEX market share. It has nearly half a million monthly active users and retains most of them.

This contribution to the network is undeniable, as Uniswap handles a vast majority of decentralized trades, making it the go-to DEX for traders and users alike. As a result, some analysts believe that UNI's market cap might be too low for the role that Uniswap serves in the broader crypto landscape.

For instance, a recent post on X highlights the surprising statistic that UNI's market cap is only 2% of Ethereum's, according to CoinMarketCap. This raises questions about whether UNI's market cap could expand in the coming years, given the role of Uniswap in the crypto scene.

As the approval of spot Ethereum ETFs could benefit UNI with more regulatory clarity, and with plans to launch Uniswap v4, which introduces unique features like Hooks to make the DEX more customizable, the performance of UNI in the upcoming bull cycle will be interesting to watch.

UNI's Price Support and Potential Direction

From the daily chart, UNI's price has support at around $6.6. However, it is currently falling away from 20DMA support, highlighting the risk of further downside in the short-time frame. If bulls push to help UNI reclaim this moving average, it could send the token above $8.5 - a sign that it might be on its way even higher, long-term targeting 2021 highs.