Memecoin Fever Drove Record Number Of Traders To Uniswap In May

Memecoin mania is driving a record number of people to trade on decentralized exchanges, with more than half a million users transacting on Uniswap last month.

According to data from Dune Analytics, 523,606 unique wallets traded on Uniswap in May, beating out the previous record from January 2022 by nearly 50%.

Uniswap is the top decentralized exchange by 24-hour volume with $1.15B, beating out its closest rival, PancakeSwap, by 4.5x.

Despite the recent uptick in activity, the protocol’s UNI token has greatly underperformed ETH since March.

The speculative fervor driven by memecoins is making small fortunes for some and resulting in disastrous losses for others as FOMO-fuelled traders race to catch the next small-cap token to explode from obscurity.

The high levels of on-chain activity generated by memecoin trading also drove a record burn rate for Ethereum last month.

Roughly 139,300 ETH worth $259M was burned last month, accounting for 51% of all Ether destroyed since the blockchain transitioned to proof-of-stake consensus eight and a half months ago, according to Ultra Sound Money.

Arbitrum Volume Picks Up

While close to 88% of Uniswap’s total value locked is concentrated on Ethereum, its Arbitrum-based v3 deployment now represents 19% of daily trade.

Uniswap has embarked upon a restrained multi-chain expansion in recent years by predominantly deploying on leading Layer 2 networks. The protocol is live on Arbitrum, Optimism, Polygon, and Zksync Era, in addition to alternative L1s BNB Chain and Celo.

On Wednesday, a governance proposal advocating for launching Uniswap v3 on Base, the upcoming Layer 2 network from Coinbase, passed with unanimous approval.

Coinbase is waiting until after Optimism completes its Bedrock upgrade on June 6 to launch Base, as the network will be built using Optimism’s OP Stack. The codebase allows Layer 2s to adopt a modular design that allows OP Stack-based L2s to easily swap between different execution engines and fraud proofs.

OP Stack-based chains can later join the Optimism “Superchain” — a pseudo-sharded network of Layer 2s Optimism plans to assemble in the future.