Only 25.83% in Circulation, Limited Market Activity from Uniswap Treasury

• Uniswap’s governance token, UNI, has fully unlocked after a four-year vesting period, but only 25.83% of the total 1 billion tokens are currently circulating.
• This low circulation has raised concerns about potential price volatility if major holders, including the team and investors, decide to sell large amounts in the future.

Uniswap’s governance token, UNI, has reached full circulation status after completing a four-year unlocking cycle. However, of the total 1 billion UNI tokens, only 25.83% are currently in actual circulation. This has raised concerns of a potential dump by major UNI holders if they seek to capitalize on the token’s price surge in the future.

UNI Supply Shortage

According to data shared by EmberCN on X, Uniswap allocated 83% of the total UNI (830 million UNI) to team members, investors, advisors, and the community treasury. These tokens were subject to a four-year vesting schedule, which has now concluded. However, the majority of these tokens remain unsold to date.

Breaking down the token distribution, Uniswap airdropped 15% to early users and allocated around 2% to liquidity provider (LP) staking rewards. Besides, they also assigned 43% of UNI tokens to the community and distributed the rest 40%to the team, investors, and advisors. 

According to EmberCN, the 17% allocated for LP mining and airdrops “has been fully circulated in the early stage of the launch.” This left the focus on the community treasury and the team/investor/advisor allocations.

The community treasury, which received 430 million Uniswap tokens, still holds 399,789,850 UNI. This data suggests that only 30.21 million UNI have flowed into the market over the past four years.

“The number of UNI currently held by the community treasury address is 399,789,850,” noted EmberCN. He revealed that a large portion of the treasury allocation remains untouched. A similar trend remains for the 400 million UNI allocated to the team, investors, and advisors.

According to the report, only 58.16 million UNI have been sold or moved into circulation. This is because “the top six addresses (such as a16z, etc.) that received the allocated amount are basically not sold.”

Furthermore, the community treasury and teams/investors/consultants who own most of the chip allocations have not sold many, the actual number of UNI in circulation is currently 258.3 million.

Uniswap has also been going through some legal hurdles recently, with CFTC slapping a $175K penalty for crypto derivatives violation, reported CNF.

Impact On Uniswap Price

The low circulation rate, despite full unlocking, suggests a cautious approach by major UNI holders. While the shrinking supply is beneficial for Uniswap’s price at the moment, it could be detrimental later on. In case these whales decide to dump the UNI tokens during a price surge, the small investors could suffer due to an unprecedented crash.

As of yet, the UNI price has maintained an impressive performance with 51.30% gains in a year. Moreover, at press time, the Uniswap token gained 2.14% to $6.59 on Tuesday, September 17. Furthermore, the 24-hour trade volume soared 20.99% to $88.11 million, signaling growing investor interest.

Despite all these developments, Uniswap has been leading the recent rally among the DEX tokens as the sectorial market cap hits more than $26 billion, per the CNF report.