Uniswap v2 pools surge on L2, overtaking Ethereum

• Uniswap now has more v2 liquidity pools on Layer 2s than Ethereum, with Base leading the pack as L2s continue to gain traction.
• Uniswap continues to battle the SEC on the regulatory front amid a delayed governance vote on incentives that has exposed some cracks in its decentralized ecosystem.

Layer 2s on Ethereum have continued to gain traction as users seek alternatives to the mainnet’s high fees. The latest demonstration of this growing influence is on Uniswap, where v2 liquidity pools on L2 have now overtaken the mainnet.

Launched in May 2020, Uniswap v2 is the first update and second iteration of the decentralized exchange. It introduced new price oracles, flash swaps, ERC20 tokens and more. The exchange has since released v3 and will launch v4 later this year, as Crypto News Flash reported.

Uniswap shared data on Thursday showing that users are now deploying more liquidity pools on v2 on Layer 2 than on the Ethereum mainnet.

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While Arbitrum, Polygon, and Optimism were mentioned, it is Base that has dominated L2s on Uniswap’s v2 pools, accounting for over 95% of all L2 activity.

Uniswap expanded v2 to L2 in February this year, after being on the Ethereum mainnet for over four years. It launched on Optimism, Arbitrum, Polygon, BNB Chain, Avalanche, and Base.

As of this writing, UNI is trading at $10.53, losing 1.66% over the past day on volume down 47%.

Base is a Layer 2 built on Ethereum and developed by a Coinbase team led by Jesse Pollak. It claims to have over 350 dApps on its network, of which gaming and social finance are the most common. According to Franklin Templeton, over half of all social cryptocurrency activity (which is a combination of social media with financial characteristics) is on Base. However, DeFi apps, although less so than social finance and gaming apps, attract the most volume, with Uniswap and Jumper being the leaders in the ecosystem.

Base turned out to be a stroke of genius for Coinbase. The U.S. stock exchange has traditionally relied on transaction fees for most of its revenue. This model comes under severe strain during bear markets, making diversification key. The basis is the best path for exchange diversification; in the first quarter of this year, the network brought into over $56 million in revenue for the exchange.

Level 2 crumbles Ethereum’s dominance

Uniswap v2 pools are just the latest demonstration of a long-term trend: Layer 2s are making a dent in the Ethereum market.

Like Crypto News Flash reported This week, a report from Bitwise found that L2s contribute to more transactions than the mainnet on Ethereum. In the first quarter of this year, the ecosystem saw 2.25 million average daily users overall, up from 250,000 four years ago. This incredible growth is due to the explosion of L2, with Base, Arbitrum, Optimism, and Polygon among those making the biggest mark.

Data from L2Batt show that Layer 2 is making millions, with Base leading the pack with $6.1 million in May. Blast and Optimism followed suit, earning approximately $1.5 million each.

Dune data showed that Base earned even more, $7 million.

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