UNI, the governance token of the Uniswap decentralized exchange, has experienced a significant surge, rising by 46% to trade above $17, reaching levels last seen in January 2022. The surge in UNI’s price is accompanied by a substantial increase in trading volume, which has jumped by 120% in the last 24 hours to $1.18 billion. As a result, its market capitalization has also grown by 44% in the past week, reaching $9.4 billion and making UNI the 16th-largest cryptocurrency by market capitalization.
The price rally comes after the Uniswap Foundation proposed an upgrade to the protocol’s governance for fee redistribution, with the aim of increasing community participation. The proposed upgrade will specifically focus on distributing the protocol fee to UNI token holders. The Uniswap Foundation announced the upgrade in a post on Feb. 23, stating that it would reward UNI holders who have staked and delegated their tokens.
The proposal involves enhancing the owner of the mainnet UniswapV3Factory contract to allow for the permissionless and programmatic collection of protocol fee revenue. The Uniswap community has welcomed this move as it strengthens the governance structure of the protocol and provides UNI token holders with a more active role in decision-making processes.
Snapshot voting for the proposal began on March 1 and will remain open until March 7. The Uniswap Foundation has reported significant support from the community, with 55 million UNI tokens, representing 100% agreement, already in favor of the upgrade.
The increasing demand for UNI can also be attributed to whale accumulation and rising network activity. Data from Lookonchain shows that a whale accumulated UNI tokens worth over $12.5 million in the past 48 hours. Additionally, Token Terminal data indicates a growth in Uniswap’s network activity, with the number of daily users increasing from around 75,000 in October 2023 to 168,106 on March 2. This demonstrates the growing adoption of the Uniswap ecosystem, which in turn drives up demand for UNI tokens.
As a result of these factors, the price of UNI has reached its highest point in 26 months. It has surged by over 143% from a low of $7 on Feb. 23 to an intraday high of $17.03 on March 6. The relative strength index (RSI) supports the bullish trend, with a reading of 87 indicating the dominance of buyers in the market. However, the RSI also suggests that UNI may be overbought, potentially signaling a trend reversal that could end the token’s bull rally.
It is important to note that this article does not provide investment advice or recommendations. As with any investment or trading decision, there are risks involved, and readers should conduct their own research before making a decision.