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In a few days, on November 17th, Uniswap’s first agricultural production opportunity will end.
When the project’s governance token was released in September, a yield farming opportunity was launched that allowed users to earn UNI by depositing cash in the decentralized exchange. This quickly became one of the most popular farms, raising $ 1 billion, then $ 2 billion of deposits over the span of a few weeks.
But with the end of the initial yield farming opportunity, the $ 2 billion in cryptocurrency stalled as Uniswap’s liquidity is pumped back into the markets.
Analysts have begun to wonder what will happen when that happens. Will users dump their cash for stablecoins, use the cash to buy altcoins or something else?
The end of Uniswap’s Ethereum liquidity mining scheme
According to Darryl Wang, an investment analyst at leading DeFi fund DeFiance Capital and a former investment banker JPMorgan, around $ 1.1 billion in ETH and so much in stablecoins in Wrapped Bitcoin will come out of Uniswap’s staking pools soon.
The UNI agricultural yield opportunity launched with the token will end if not extended soon.
This raises the question of where that capital will go.
Wang speculates that much of this liquidity “will leave the Uniswap system in search of higher returns.” His tip is 50 percent liquidity, then around $ 500 million in ETH and then another $ 500 million in stablecoins and Wrapped Bitcoin.
Focusing on Ethereum, he said there are a number of other opportunities for holders, including staking in DeFi applications like SushiSwap or Alpha Homora, or even in ETH2; be held long-term or sold for stablecoins and altcoins.
1 / November 17th $ UNI agriculture will end.
At this time ~ $ 2.3 billion in UNI agriculture funds are being distributed, with $ ETH being the reference token.
This means that there are currently ~ $ 1.1 billion in ETH blocked, which are about to be released into the wild.
Where do you think ETH will go? pic.twitter.com/nW3via0vH6
– Wangarian (@ Wangarian1) November 11, 2020
Most will be sold, he believes. As many recall, the day UNI yield farming was launched, the altcoin rallied by around 6-7%. Wang explains that this was a by-product of farmers who accumulated ETH to grow with:
“Commercial farmers have loaded into ETH to capitalize on UNI premiums and when they run out, these farmers will likely dump their ETH too.”
This fact, coupled with an ongoing rally in the altcoin market as I write this, has led Wang to suggest that Ethereum sold for altcoin along the risk curve has a high chance of succeeding.
We already see this happening when stablecoins on the sidelines are being distributed by altcoin amid a growing expectation of a second wave of DeFi that will be bigger than the first.
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