UNI Rises Ahead of Launch of Unichain for Ethereum – Will it Boost ETH?

The native asset of the decentralized exchange had been rising ahead of the launch, delivering gains of 5.3% in the past 7 days despite the crypto market turmoil.

Unichain comes to compete in the crowded realm of L2 solutions for Ethereum, which include well-positioned protocols like Arbitrum, Base, and Optimism.

However, the developing team claims to have developed one of the fastest and cheapest solutions in this space to meet the needs of Ethereum’s growing decentralized finance (DeFi) ecosystem.

Through a series of improvements that will soon be implemented once the Pectra upgrade for Ethereum goes live, Unichain will be able to offer much lower transaction costs (up to 95% less compared to the L1’s fees) by running a parallel validation network that will operate safely but more efficiently than the Ethereum mainnet.

Unichain aims to offer a seamless user experience to traders, allowing them to swap tokens easily and cheaply, regardless of which chains they have opted to use previously. This would be a stark contrast to the existing solutions, most of which feature unfriendly user interfaces and complex swapping mechanisms.

To achieve this, they have partnered with Optimism to rely on its Superchain to offer multichain support to users without compromising affordability.

Positive Momentum Picks Up for UNI

Uniswap has been steadily declining since its December peak, and it’s currently trading 50.5% below its peak closing price.

The latest two lower highs were seen at $12.5 and $15. These two levels are important resistances that the token will need to overcome to overturn this current downtrend.

Meanwhile, UNI has found support temporarily at the $8.7 level, especially after the February 3 flash crash, triggered by Trump’s decision to increase tariffs on Mexican and Canadian imports.

This support level could serve as a launch pad for UNI at a point when momentum indicators are all flashing positive signals. In this regard, the Relative Strength Index (RSI) has moved above the signal line (a buy signal) while the MACD is displaying a positive reading for the first time since January 4.

If we set the $12.5 resistance as the closest target for UNI, that would give us a 50% upside potential with a downside risk of around 10% if the token breaks below the $8.7 level, meaning a 5-to-1- risk/reward ratio.

Uniswap is the 9^th Largest DeFi Protocol on Ethereum

The Ethereum decentralized finance (DeFi) ecosystem is the largest in the crypto market, with a total value locked of $55.83 billion.

It is the home of some of the largest decentralized protocols and applications including Lido Staking, whose TVL currently stands at $24.4 billion, AAVE, the EigenLayer, and Ethena.

Uniswap is currently the ninth largest dApp in the Ethereum DeFi ecosystem, with a TVL of $3.8 billion. However, it is the largest DEX. The protocol has built a solid reputation in the crypto space and is the second most valuable DEX in the industry, with a market cap of $5.8 billion.

Its market value has only been surpassed by Hyperliquid, as the latter has built a perpetual contracts trading platform that operates in a proprietary layer-one blockchain rather than relying on a third-party network to function, like Uniswap does.

However, Ethereum’s robust decentralized infrastructure has created difficulties for its DeFi ecosystem to expand, as gas fees are high and transactions can take too long to be cleared, especially during peak usage times.

“For crypto traders, high gas fees and slow transactions have long been a problem. With fast block times and low fees, Unichain is optimized for on-chain markets, offering one-second blocks and 95% cheaper gas than Ethereum,” yesterday’s Unichain announcement reads.