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High fees on Uniswap could lead to users searching for cheaper alternatives. Order flow toxicity and a decline in organic transactions on Uniswap could cause disinterest in the DEX. Uniswap [UNI] ranked third in the crypto space in terms of fees charged to users. According to Token Terminal’s tweet on 25 January, the cumulative fee […]
also increased. Order flow toxicity refers to the negative impact on liquidity caused by market participants placing large, aggressive orders that push prices away from fair value.
This can lead to a negative experience for other traders and can ultimately lead to a decline in trading volume on the platform.In addition, Dune Analytics’ data showed that the number of organic transactions on the protocol declined. For the uninitiated, organic transactions refer to normal trades made by regular users.
On the other hand, the growth of arb and sandwich transactions increased. Arb transactions refer to trades that take advantage of price discrepancies between different markets, while sandwich transactions refer to a specific type of trading strategy that aim to profit from the spread between two different markets.These factors could be the reason why whales became disinterested in thetoken. As they exited their positions, the price of UNI fell.
The declining MVRV ratio suggested that the UNI holders sold their positions for a profit. The negative long/short ratio implied that the sell-off was primarily done by short-term holders.Whether Uniswap’s high fees will ultimately lead to its detriment remains to be seen. The platform’s popularity and trading volume will probably play a significant role in determining its future success.
At the time of writing, the price of UNI was $6.29. It increased by 7.12% in the last 24 hours, according to
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