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1/
@Iiterature Sure!
@UniswapExchange has different functions for ETH-ERC20 and ERC20-ERC20 trades.
This gives the UX improvement of using ETH directly and not having to wrap it first.
@Iiterature Sure!
@UniswapExchange has different functions for ETH-ERC20 and ERC20-ERC20 trades.
This gives the UX improvement of using ETH directly and not having to wrap it first.
2/
Some projects use WETH to pull ETH from your address via approve/transferFrom - something not yet supported with ETH.
(recent vitalik thread on the topic: ethereum-magicians.org/t/brainstormin…)
But most do it b/c they don't want to write separate functions to handle ETH.
Some projects use WETH to pull ETH from your address via approve/transferFrom - something not yet supported with ETH.
(recent vitalik thread on the topic: ethereum-magicians.org/t/brainstormin…)
But most do it b/c they don't want to write separate functions to handle ETH.
3/
Uniswap creates exchanges between ETH and ERC20s. Since WETH is an ERC20, this allows for an ETH<>WETH pair.
Profit in Uniswap come from fees on trading volume.
Loss come from the difference in relative value of the assets from when liquidity is added to when it is removed.
Uniswap creates exchanges between ETH and ERC20s. Since WETH is an ERC20, this allows for an ETH<>WETH pair.
Profit in Uniswap come from fees on trading volume.
Loss come from the difference in relative value of the assets from when liquidity is added to when it is removed.
4/
This makes ETH<>WETH unique, since ETH and WETH will never accrue any loss. Any fees collected on the pair will be pure profit - the only risk is a smart contract hack.
It also makes it a terrible pair for traders since they are paying fee + slippage to wrap/unwrap ETH.
This makes ETH<>WETH unique, since ETH and WETH will never accrue any loss. Any fees collected on the pair will be pure profit - the only risk is a smart contract hack.
It also makes it a terrible pair for traders since they are paying fee + slippage to wrap/unwrap ETH.
5/
However WETH is widespread and DAPP devs still don't want to write different functions for ETH and ERC20
Some DAPPs that use Uniswap are using WETH<>ERC20 swaps which pay fees for both WETH->ETH and ETH->ERC20.
However WETH is widespread and DAPP devs still don't want to write different functions for ETH and ERC20
Some DAPPs that use Uniswap are using WETH<>ERC20 swaps which pay fees for both WETH->ETH and ETH->ERC20.
6/
This is strictly worse than wrapping/unwrapping the WETH on-chain and performing ETH<>ERC20 swaps - but with a large enough liquidity pool only ~0.3% worse.
Uniswap ETH<>WETH 24hr volume was almost $200k and it has been above $20k for weeks
This is strictly worse than wrapping/unwrapping the WETH on-chain and performing ETH<>ERC20 swaps - but with a large enough liquidity pool only ~0.3% worse.
Uniswap ETH<>WETH 24hr volume was almost $200k and it has been above $20k for weeks
7/
Annual yields based on current $1.5M ETH<>WETH Uniswap pool at different 24hr volumes:
$2k volume: 0.15%
@compoundfinance ETH lending: 0.19%
$5k volume: 0.37%
$20k volume: 1.46%
@Dharma_HQ ETH lending : 2.5%
$50k volume: 3.65% (today)
$200k volume: 14.6% (yesterday)
Annual yields based on current $1.5M ETH<>WETH Uniswap pool at different 24hr volumes:
$2k volume: 0.15%
@compoundfinance ETH lending: 0.19%
$5k volume: 0.37%
$20k volume: 1.46%
@Dharma_HQ ETH lending : 2.5%
$50k volume: 3.65% (today)
$200k volume: 14.6% (yesterday)
8/
Right now Uniswap ETH<>WETH is the highest returns on ETH lending with no lockup required. This is extremely weird and not a shot at either of the above protocols.
My hope is that some integrations will switch to more efficient ETH implementations.
Right now Uniswap ETH<>WETH is the highest returns on ETH lending with no lockup required. This is extremely weird and not a shot at either of the above protocols.
My hope is that some integrations will switch to more efficient ETH implementations.
fin/
But there will likely always be some ETH<>WETH Uniswap volume. My guess is either volume will shrink or liquidity will increase until the rate is comparable to other lending protocols.
Learn more about uniswap returns (@bluepintail):
medium.com/@pintail/under…
But there will likely always be some ETH<>WETH Uniswap volume. My guess is either volume will shrink or liquidity will increase until the rate is comparable to other lending protocols.
Learn more about uniswap returns (@bluepintail):
medium.com/@pintail/under…
