What do you think about @Uniswap‘s upcoming DeFi-specific Layer 2—Unichain? Public opinion seems divided, with some interpreting it as yet another major DeFi app “defecting” from Ethereum. Previously, dYdX launched its own independent chain, and MakerDAO announced its “Endgame” with NewChain, both of which sparked heated discussions.

In reality, Uniswap’s plan for an independent chain shouldn’t be seen as defection; instead, it could serve as a catalyst to boost Ethereum’s Layer 2 ecosystem. Why? Here are my thoughts:

1) dYdX and MakerDAO faced Ethereum’s bottlenecks:Both dYdX, based on the Cosmos IBC framework, and MakerDAO, leaning towards Solana, created independent chains due to the limitations of Ethereum’s mainnet. The Gas Limit restricts the number of transactions per block to just over a thousand. Even though Layer 2 networks perform off-chain scaling, they are still constrained by the mainnet’s Rollup contracts. As a result, both dYdX and MakerDAO opted for independent consensus chains. (I’ve analyzed the reasons in detail in a previous post: https://x.com/tmel0211/status/1699290789287956562…)

Uniswap, starting with UniswapX, adopted a hybrid approach that combines off-chain preprocessing with on-chain execution, ensuring deep integration with Ethereum—so it can’t really be labeled as “defecting.”

Uniswap Labs’ decision to build Unichain as a Layer 2 using the OP Stack framework underscores this point, as it aligns with Ethereum’s Rollup-centric strategy.

2) On the contrary, in my opinion, Uniswap, a project with phenomenal application genes, could break the current Layer 2 development bottleneck

Unichain is designed to extend DeFi capabilities, which could significantly benefit Ethereum’s Layer 2 ecosystem. Right now, the two major Layer 2 camps—OP-Rollups and ZK-Rollups—haven’t unlocked the full potential of DeFi.

Lending protocols struggle due to trust issues with non-native token collateral. DEXs face challenges from fragmented liquidity and user bases. Only a few derivative platforms like GMX have gained traction.The current Layer 2 environment isn’t conducive to a thriving DeFi ecosystem.

Newer projects like @MetisL2 are experimenting with native tokens and decentralized sequencer mining mechanisms to build independent Layer 2 economies, addressing the lack of DeFi momentum. However, the tokenomics of most Layer 2 networks still don’t fully support DeFi.

With Uniswap, which handles over 60% of Ethereum’s mainnet transactions, launching a dedicated Layer 2 for DeFi, expectations are naturally high.

Unichain’s choice to adopt the OP Stack superchain framework rather than a Layer 3 approach is also telling. While Layer 3 chains offer more flexibility for custom tokens and consensus mechanisms, they depend on Layer 2s for interoperability and shared components. This narrative isn’t mature yet and is better suited for niche applications.

Uniswap, as a giant application, has more commercial potential with a Layer 2 strategy and doesn’t need to rely on other Layer 2s.

While launching a Layer 3 might allow for a new gas token, a Layer 2 strategy empowers the $UNI token with governance functions. It will also reinvigorate dormant Layer 2 ecosystems like @arbitrum and @Starknet. Uniswap can further integrate products like Uniswap Wallet and UniswapX, making this approach far more meaningful than issuing a new token from scratch.

3) Unichain has two core features that deserve special explanation:

1. A decentralized validator network, which will add an additional layer of Finality security confirmation.

Unichain will introduce an additional layer of finality security. It functions like Eigenlayer’s AVS middleware but acts more like a “pre-confirmation” consensus network. This network supports 1-second block times, 250ms sub-blocks, and new TEE-based privacy and MEV protection mechanisms. Governance will be powered by UNI tokens, with validators required to stake UNI to participate.

This shift, where a Layer 1 governance token becomes a staking and reward token for a new Layer 2 chain, is a game-changer.

1. The upgrade will introduce the ERC7683 proposal, establishing a “cross-chain intent” standard to provide a universal interface for cross-chain transaction execution systems.

In simple terms, it defines a standard for cross-chain order information, including who is making the transaction, what is being traded, and the transaction deadline. With this unified framework, different chains can collaborate to process the same order.

Clearly, Unichain aims to tackle cross-chain operability challenges. By leveraging Uniswap’s large user base and liquidity siphoning effect, Unichain is likely to attract a wide range of DeFi applications. If Unichain successfully consolidates an ecosystem of applications, it will be more meaningful to assess later whether the Layer 2 Rollup narrative holds up.

4) As for concerns about whether the launch of Unichain will affect the existing Uniswap protocol on Ethereum’s mainnet, I don’t think it will. Uniswap Labs’ commercial strategy and the development of the open-source, decentralized Uniswap protocol have long been operating in parallel. Even with the launch of Unichain, the original Uniswap protocol will remain unaffected.

If there is any impact, it would only be that Unichain will compete with other Layer 2 networks, ultimately boosting the overall weight of the Layer 2 market.

Currently, Unichain seems to have a first-mover advantage in terms of application growth and user engagement, thanks to the influence of the Uniswap wallet and brand. If Uniswap’s siphoning effect becomes more pronounced, it will likely cause a significant portion of users and traffic to migrate to Layer 2, aligning perfectly with Ethereum’s Rollup-centric strategy.

That’s all.

In conclusion, Uniswap Labs’ decision to launch a Layer 2 network is undeniably positive for the Ethereum ecosystem. As a disruptor, Uniswap could bring the much-needed “catfish effect” to the Layer 2 market.

Whether Unichain is meaningful depends on perspective. From a pure application standpoint, @VitalikButerin’s skepticism is understandable. But from a commercial strategy perspective, it’s clear that Uniswap’s ambitions go beyond just being a protocol. As long as it aligns with Ethereum’s roadmap, this move will be a win-win.

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