In the race to bring decentralized finance (DeFi) to different blockchains, the two largest decentralized exchanges (DEx)— Uniswap and PancakeSwap—have been doubling down on multichain expansion.
The recent deployment of PancakeSwap on Base means the DEx is now live on eight separate networks. Meanwhile, Uniswap V2 is one step closer to branching out from its native Ethereum.
In the world of DeFi, Uniswap was a pioneer when it launched in 2018. When PancakeSwap hit the market two years later, it was initially little more than a BNB Chain-based clone of Uniswap’s Ethereum-based exchange.
But in the years since, the two platforms have diverged on everything from products and services offered, to the way they are governed.
In its latest deployment, last week, the PancakeSwap went live on the Coinbase-incubated Layer 2 Base.
Versions of PancakeSwap can now be found on the BSC, Ethereum, and Aptos Layer 1 blockchains. As well as Base, it has also been launched on other Ethereum Layer 2s, including Polygon, ZKSync Era, Arbitrum One, and Linea, resulting in a total of eight distinct Layer 1 and Layer 2 deployments.
For the older Uniswap V2, three years since its launch, the community has recently voted to deploy the protocol on all chains currently supported by Uniswap V3.
As they have expanded beyond their native blockchains, Uniswap and Pancakeswap have inevitably started to step on each other’s toes.
In the early days of DeFi, things were more simple. To perform transactions on Ethereum, Uniswap was the obvious choice. Meanwhile, PancakeSwap offered an alternative for people who wanted to trade on BNB Chain, with its distinct token offerings.
Now, however, Uniswap has expanded to BNB Chain and PancakeSwap has been deployed on Ethereum. In other words, exchanges that once operated in distinct spheres now compete directly for users.
As things stand, Uniswap remains the most popular decentralized exchange, accounting for nearly an 80% share of the market by trade volume. PancakeSwap is currently the second-most popular DEx, with a 20% market share.
But at times in the last year, PancakeSwap’s market share has swollen to above 30%, while Uniswap’s has been known to fall below 50%.
Of course, the decentralized finance will inevitably evolve. As demand for multichain DeFi solutions grows, alternative blockchain deployments are emerging as a key battle line in the competition for users.
Just because Uniswap is on top today, that doesn’t mean PancakeSwap or another competitor couldn’t usurp the market leader in the future.
After all, over the years, the landscape of crypto trading has been dramatically reshaped by the rise and fall of various exchanges.
If there is a lesson to be learned from the fall of one-time giants like Mt. Gox and FTX, it is that no platform is ever secure in its dominance, and if, for any reason, an exchange should lose its position in the market, the next contender is already waiting in the wings.