We’re excited to announce that the Uniswap Incentive Analysis Terminal, developed by Forse, is now live.
As outlined in our community-approved proposal, the Terminal provides detailed analytics on the Uniswap Revitalization and Growth Program across Arbitrum, Base, Scroll, and Blast; offering clarity and actionable insights regarding the program’s effectiveness.
With over $3.5M allocated, ongoing analysis is essential. Our goal is to empower the Uniswap community to make informed, data-driven decisions regarding future incentive strategies.
What can you expect?
The Terminal is divided into two tabs, providing a comprehensive analysis of incentive performance:
Program Overview:
- Weekly TVL Breakdown: Understand the weekly evolution of Total Value Locked (TVL) influenced by incentives.
- Chain-level Performance over Time: Explore how efficiently each chain converted incentives into incremental TVL.
- User Segmentation Analysis: Dive deep into user (LPs) segments, understanding user tenure, and their retention rates.
- Incentive Utilization Tracking: Track the lifecycle of incentives—how they were claimed, whether users held or sold them, and how these patterns evolved over time.
Pool-level Performance:
- Individual Pool Insights: Discover detailed performance metrics on each incentivized pool, ranked by ROI, segmented by pool types (Stable, Pseudo-stable, and Volatile).
- Post-Incentive TVL Analysis: Learn how each pool retained liquidity once incentives concluded, highlighting key trends in long-term liquidity retention and identifying pools that maintained or lost their TVL.
Key Insights Recapped
After an in-depth analysis of Uniswap’s incentive campaigns across Arbitrum, Base, Scroll, and Blast, we’ve collected key insights highlighting the effectiveness, challenges, and outcomes of the Revitalization and Growth Program:
Incentives Boosted TVL Significantly, but Retention Proved Difficult
The program led to an immediate and significant increase in liquidity across all four blockchains, with Base alone seeing average daily TVL increases exceeding $6 million during the campaign. Despite these short-term successes, retaining liquidity once incentives ended posed a substantial challenge across most pools, with liquidity dropping sharply, especially on smaller chains like Scroll and Blast.
Pool Performance Varied Based on Pool Types
Stable pairs (e.g., FRAX/USDT and USDC/USDT) consistently delivered strong immediate returns in both TVL and trading volume during incentives but saw substantial liquidity outflows shortly after incentives concluded, driven primarily by short-term-oriented liquidity providers.
Pseudo-stable pools, such as wstETH/WETH and cbETH/WETH, attracted substantial liquidity but failed to generate proportional increases in trading volume. Post-incentive retention for these pools was also notably poor.
In contrast, volatile ETH-stablecoin pairs (e.g., WETH/USDC and WETH/USDT) showed better long-term liquidity retention, although they required higher upfront spending. This category emerged as a more reliable source of sustained liquidity post-incentives, while being the most inefficient in the short them ROI.
Note: Bubble Size indicates the total quantity of all time LPs
Incentive Utilization Reveals Short-Term Liquidity Provider Behavior
Across all chains, the majority of incentivized liquidity providers displayed mercenary behavior, with over two-thirds of UNI rewards being sold immediately upon claim. This pattern indicates short-term profit motives rather than long-term commitment to the Uniswap ecosystem.
Chain-Specific Insights
Base demonstrated relatively strong post-incentive retention, mainly driven by the WETH/USDC pool, despite fierce competition from Aerodrome. Arbitrum initially suffered significant liquidity outflows, especially in stable and pseudo-stable pairs, but volatile pools like USDC/WETH later helped drive a recovery, outperforming direct competitors.
Scroll and Blast faced substantial challenges maintaining TVL gains post-incentives. Both chains experienced notable liquidity withdrawals shortly after the conclusion of campaigns. In these cases, broader market conditions and a general chain-wide trend (observed through competitor analysis) likely compounded the decline.
Key Performance Metrics
The Terminal quantifies key performance metrics that reveal both the immediate impact and long-term value of the incentive program. With $13.6M in TVL growth and $75.2M in weekly volume growth across 4.3k participants, the program achieved an impressive ROI of $1,281 additional TVL per dollar spent. However, the 47.3% 90-day retention rate and the fact that only 4.1% of distributed UNI was held by recipients underscores the challenge of converting short-term participation into sustained ecosystem engagement.
Recommendations
Aiming for Sustainable Liquidity
While immediate liquidity boosts through stable and pseudo-stable pools are attractive, our analysis suggests prioritizing volatile pairs with higher impermanent loss (e.g., WETH/USDC) to achieve longer-lasting liquidity retention. These pools, despite higher initial costs, offer superior long-term value.
Mitigating Mercenary Behavior
The predominance of short-term, mercenary liquidity behavior identified in our analysis highlights a clear area for improvement. Future programs could consider tiered or vested incentive structures to achieve sustained liquidity provision rather than immediate selling of rewards.
Cross-DEX Competitiveness
Uniswap DAO should continue monitoring competitive dynamics closely, particularly in ecosystems like Base, where direct competition (e.g., Aerodrome) impacted retention significantly. By taking into consideration the types of pools that yield better long-lasting results, Uniswap should be able to avoid falling into the competition trap, where incentives primarily benefit mercenary capital seeking the best short-term yields.
Chain Maturity and Ecosystem Development
Data from our analysis suggests that while bootstrapping liquidity on novel or emerging chains could potentially yield significant benefits in terms of early market positioning, it’s crucial to consider the maturity and overall health of the DeFi ecosystem on these chains. Scroll and Blast exemplify cases where, despite initial enthusiasm and potential as fertile grounds for growth, the relative immaturity of their DeFi ecosystems led primarily to mercenary participation. The liquidity introduced via incentives did not result in sustained, long-term retention as seen on more developed chains such as Arbitrum and Base.
Future incentive programs targeting emerging chains should strategically complement liquidity incentives with efforts to actively develop the ecosystem. This could include supporting use cases that drive genuine long-term engagement, ecosystem partnerships, or community-building initiatives. By creating real utility beyond yields alone, Uniswap DAO can attract liquidity providers genuinely committed to the network’s sustained growth rather than purely yield-driven mercenary capital.
Check out the Terminal
Explore the terminal here: https://dashboard.forse.io/main/uniswap/uniswap_incentive_analysis_terminal
We Value Your Feedback
This Terminal was built specifically for the Uniswap community, and your insights are essential for its continued improvement. As the DAO evaluates these recommendations and shapes future incentive strategies, we strongly believe that community-driven analytics are key to sustainable growth.
We remain committed to maintaining and enhancing the Terminal, within the terms of the community-approved proposal. Additionally, based on feedback received, we are currently developing several community-inspired metrics, leveraging existing data to at no additional cost.
We’re enthusiastic about supporting Uniswap DAO through ongoing analysis and strategic consultation, and remain open to exploring further collaboration opportunities. Please share your thoughts, feedback, or suggestions below—your perspective helps us deliver analytics that matter most to Uniswap.
