- DeFi on Ethereum gains momentum with rising gas fees, driven by Uniswap’s activities.
- Despite a $5 billion surge in DeFi TVL, Uniswap struggles below $5.6, facing resistance.
- UNI prices up 30%, but bulls grapple to break above November highs.
In a dynamic turn of events, the decentralized finance (DeFi) space on Ethereum is experiencing a notable surge, fueled primarily by the intriguing trajectory of gas fees throughout the first three weeks of November, as unveiled by analytics from Kaiko. Despite this DeFi revival, Uniswap (UNI), a leading player in the space, finds itself ensnared below the $5.6 mark, grappling with resistance that has thwarted attempts to break into new highs for 2023.
Ethereum Gas Fees Surge, Courtesy of Uniswap’s Influence
Kaiko’s blockchain analytics platform sheds light on a significant surge in average gas fees on Ethereum, reaching multi-month highs in the previous week. Uniswap emerges as a central figure in this narrative, with its activities, particularly in meme coins like GROK, driving transaction volumes and subsequently escalating the demand for block space, resulting in heightened gas fees.
While gas fees exhibit volatility, a prevailing upward trend has been witnessed in the first three weeks of November. Data from Ycharts indicates that the average transaction cost surged to 45.13 Gwei as of November 20, marking an almost 100% increase from November 19. This considerable jump from 24.84 Gwei suggests a substantial shift from the late October figure of 17.66 Gwei.
The correlation between gas fees and the reaction of Ethereum (ETH) and DeFi token prices is evident. As DeFi activities, along with non-fungible token (NFT) minting and trading, gain momentum, gas fees tend to expand in sync with trending markets. The recent surge in gas fees hints at a potential market upswing, potentially benefiting critical protocols such as Uniswap and Aave.
DeFi TVL Surges, Uniswap Struggles Below $5.6
As of the latest update, the total value locked (TVL) across all DeFi protocols has surpassed $46.6 billion as of November 21, as reported by DeFiLlama. This marks a noteworthy increase of nearly $5 billion since early November and a substantial uptick from the mid-October figure of $37 billion.
Despite the challenges posed by gas fees associated with Ethereum’s mainnet scaling, the platform continues to be the preferred choice for deploying DeFi applications. Ethereum boasts a TVL of $25.4 billion, with Uniswap securing its position as one of the largest protocols with a TVL of $3.216 billion.
Although UNI prices have experienced a 30% surge since mid-October, breaking the resistance at $5.6 has proven to be a formidable task for bulls. Daily charts reveal a tapering of trading volume, signaling a potential lack of momentum and sustainability in the current uptrend. Technically, a solid close above the November highs could pave the way for further gains, potentially retesting 2023 highs of approximately $7.2 for UNI. The coming days will unveil whether Uniswap can break free from its current constraints and capitalize on the broader DeFi momentum sweeping through the Ethereum ecosystem.
Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.