Bitwise CIO: Here’s Why Uniswap Feels Undervalued at $6 Billion

One of the leading decentralized exchanges received words of encouragement from a prominent figure in the crypto space.

Even though the project’s results are significant, it can’t seem to return to its prior feats, and there are growing concerns about governance.

More Room to Grow

Matt Hougan, Chief Investment Officer at Bitwise, the largest provider of cryptocurrency index funds with more than $1.5 billion in assets under management (AUM), made a bold statement on X earlier today.

“Uniswap at $6 billion feels too small. If it were a company, it would be the 400th largest financial services business in the world — roughly the same size as Storebrand, a savings and insurance business in Norway.”

Members of the crypto space commented with a mixture of agreeing and disagreeing statements, with the majority of the input relating to the protocol’s revenue. Another point was that the native governance token, UNI, does not inherently provide value to investors.

Still, given that a decentralized autonomous organization (DAO) governs how the protocol will operate, a market capitalization of $6.15 billion, as per the most recent data from CoinMarketCap, is impressive. The native token is also up over 30% for the month, and over 100% year-to-date (YTD).

Trading volume on the decentralized exchange is also noteworthy, with the last three months alone bringing in over $280 billion, according to data from Token Terminal at the time of printing.

Still Struggling

Despite the impressive numbers posted, Uniswap’s price appears to be stuck around the $10 mark, with no significant movement for some time now. Throughout July, the resistance level seemed to be around $11, while support was between $6 and $8.

Following the token reaching a high of $19 on December 8th last year, analysis firm Lookonchain detected a massive move of 989,520 UNI ($16.73 M) from trading company Cumberland into various exchanges. Shortly after, the price plummeted and has not been able to regain its strength since.

A research-sharing platform, arXiv, has posted an interesting paper on Uniswap’s Network, and the findings on the governance model are worrisome.

Despite being promoted as decentralized, a small group of large UNI token holders (including early investors and the Uniswap Foundation) control most of the voting power, and users with small balances of the token have minimal influence on key decisions.

Moreover, essential proposals tend to get delayed or are based on the interests of larger holders. There are even reports about a lack of transparency, with some off-chain coordination being noted.