Uniswap Labs, the founder of the original decentralized exchange (DEX) Uniswap, has launched the UniChain layer 2 (L2) blockchain. Another DeFi player, the money market fund provider Ondo Finance, launched its own layer 1 blockchain last week. Fragmentation is a feature of both the permissioned and permissionless blockchain ecosystems.
While there’s a different rationale for so many blockchains in the DeFi and traditional finance (TradFi) spaces, there is some overlap. In TradFi, the goal of many institutions is to develop THE blockchain and have others institutions come and use it, which ultimately is a profit motive. For DeFi the driver is often tokenomics – new chains provide revenue opportunities for the related tokens.
Layer 2 chains in the permissionless arena offer lower transaction costs compared to Ethereum. Uniswap users already have the option for lower cost offerings on 11 other chains. Before deciding to launch UniChain, Uniswap conducted research which found it has far more transactions on other layer 2 chains than on the Ethereum mainnet. But these are much smaller transactions. A quick look at total value locked (TVL) shows almost $3 billion on Ethereum. The second largest chain is Coinbase’s Base with almost $250 million.
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