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Uniswap Labs’ new blockchain, Unichain, is estimated to earn nearly $500 million a year from fees that would have been paid to the Ethereum network. Uniswap Labs will retain Maximum Extractable Value (MEV) as it owns all the validators on the network. Liquidity providers could also benefit by participating in the MEV through staking coins. Ethereum validators and Ether token holders might incur losses as Uniswap’s new blockchain may result in fewer fees and less burned ETH returning to their blockchain. Unichain launched on Oct. 10, promising faster, cheaper transactions with improved blockchain network compatibility.

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Uniswap’s brand new blockchain called Unichain could end up being a big win for its creators at Uniswap Labs and for everyone holding on to the project’s tokens. The reason is that they stand to earn nearly $500 million a year from fees, money that would have otherwise gone to the Ethereum network.

Once Unichain gets launched, an estimated $368 million, which would have been paid to Ethereum’s validators during the past year, would instead go straight to Uniswap Labs and probably to those holding onto Uniswap tokens. This is according to Michael Nadeau, the founder of DeFi Report, who broke the news in his Oct. 13 post.

What’s more, Uniswap Labs will be able to keep all Maximum Extractable Value (MEV) on Unchain because they own all of the validators on the network. Ethereum validators won’t be allowed to take a cut of the MEV anymore, Nadeau explained. He also mentioned that about 10% of all fees paid on Uniswap (around $100m for the last year) come from MEV, and Uniswap Labs might decide to share some of this with token holders.

Nadeau pointed out that folks who provide liquidity to Uniswap could also win from this new blockchain. They could get involved in the settlement process and join the MEV race through staking their coins. On the other hand, Ethereum validators and those holding Ether (ETH) tokens might lose the most after the launch of Unichain. They’d end up with fewer fees and less burned ETH returning to their blockchain.

One year ago, Uniswap, the biggest decentralized exchange by volume, pulled in over $1.3 billion through trading and settlement fees across five primary chains, including Ethereum, Optimism, BNB Chain, Base, and Polygon.

Uniswap launched Unichain on Oct. 10, promising quicker, cheaper transactions and improved compatibility with different blockchain networks. However, the launch sparked different reactions within the decentralized finance (DeFi) community. Many were skeptical, claiming that another layer-2 blockchain wasn’t really needed.

But those in favor of Unichain said it would give an average DeFi user a smoother experience. Plus, it would result in more concentrated liquidity and fewer problems with fragmentation across different chains.

Ethereum’s co-founder Vitalik Buterin also joined the conversation. He criticized the idea of a layer-2 blockchain from Uniswap in a September 2022 post. “Uniswap’s main compelling point is that you can just step in and get a trade done in 30 seconds without dwelling on it. Having a Uniswap chain or even rollup scenario doesn’t make sense in that context. However, having a copy of Uniswap on every rollup does,” Buterin noted.

Source: Cointelegraph