The price of UNI, the native governance token of decentralized finance (DeFi) platform , has reached a new all-time high of $14.25, according to crypto metrics platform CoinGecko.
At press time, UNI is trading at around $14.22, up 13.7% on the day. The token’s price has surged by over 65% in total over the past week, pushing its market capitalization over the $4 billion mark.
— αlphαntes (@Fiskantes) January 26, 2021
Market capitalization is an asset’s current price multiplied by its total supply—a metric that lets you compare multiple coins that have different supplies.
On the heels of UNI’s ongoing price rally, it’s now ranked second among the top DeFi tokens by market cap, CoinGecko’s data shows. And even outside of the “social circle” of DeFi tokens, UNI’s performance is admirable—it is currently ranked thirteenth among all cryptocurrencies by its market cap.
DeFi is booming
Since exploding last summer, the DeFi ecosystem has been one of the top-performing crypto markets so far. According to analytics platform Messari, the only two sectors that are in the green in terms of their recent market capitalization growth are DeFi and decentralized exchanges—they are up 17.6% and 23.2% over the last week, respectively. In comparison, the Currencies sector, including Bitcoin, is down 12%.
As Decrypt reported, DeFi’s market cap recently exceeded $45 billion amid the ongoing price rally, with UNI and AAVE showing the best results among the top 10 DeFi tokens.
Messari researcher Ryan Watkins pointed out that UNI is not extracting fees from its liquidity providers—unlike many other projects in the industry that are “obsessed” with dividends. While the potential to accrue value is important for tokens, earnings potential is not the same as dividends, he argued.
Along this line of thinking, even if a token does implement some kind of fee capture it’s much better to reinvest those earnings rather than distribute as dividends.
UNI implicitly does this by not extracting fees from LPs (fee switch off).
— Ryan Watkins (@RyanWatkins_) January 26, 2021
“Along this line of thinking, even if a token does implement some kind of fee capture it’s much better to reinvest those earnings rather than distribute as dividends. UNI implicitly does this by not extracting fees from LPs (fee switch off),” he tweeted. Perhaps that’s why it’s performing so well.