VC fund USV took profit on its 2020 investment in Uniswap (UNI)

USV, one of the early investors in Uniswap (UNI) sent another batch of tokens to Coinbase Prime. The early investor started sending UNI to the exchange since December 6. 

Union Square Ventures (USV) has sent more Uniswap (UNI) tokens to Coinbase Prime, potentially taking profits on its earlier investments. The fund is one of the early backers of Uniswap from 2020, which waited for a more favorable price range. USV is a Tier 2 fund, specializing in Series A financing. 

In the latest transaction, USV transferred 578,000 UNI, valued at $8.45M. In three weeks, USV moved 3.511M UNI, valued at $54.56M. The fund holds more than 10M UNI in its remaining share, valued at more than $156M. 

The involvement of USV is relatively small compared to other VC backers for Uniswap. The fund has a total of 43 early investments in the crypto space, and has achieved higher returns compared to other VC funds. USV was one of the early backers of Polygon, profiting from the platform’s growth during the boom of Web3 services. USV has achieved total returns of over 165,200%.

The popular DEX project used its first-mover advantage to raise more than $188M in several rounds over the years. USV participated in a Series A round raising $11M, while Uniswap was still in its early stages and did not yet attract the biggest funds. 

Uniswap later received backing from A16Z and Polychain Capital, helping the DEX raise its $165M Series B round in 2022. Investors control a little over 18% of the UNI supply, with the biggest share left for governance and community activities. UNI has managed to hold onto a respectable price range, as most backers hold onto their tokens, expecting higher potential returns or governance rights.

USV transferred the funds from two main wallets, address 1 and address 2. The wallets were relatively inactive over the past months, mostly used to store the received UNI for a long-term investment. UNI has already completed its unlocking schedule, so it is up to early backers to decide on the movement and eventual selling of their tokens. 

UNI still waiting for a stronger breakout

The average price for all transfers is $15.53, still far from previous bullish targets from UNI. For USV, however, the holding paid out, as the early market price was under $3.50. USV also held its tokens through the 2021 boom when UNI peaked above $42. 

After the transfers, UNI still traded at $14.12. The exchange is increasingly influential, with presence on the tokenless Base blockchain. Despite this, UNI tokens have managed a relatively small rally in 2024. UNI started the year in the $7 range, still managing 100% net growth to date, though lagging behind more active earners. 

Over the years, UNI has shown patterns suggesting some selling from VC backers or early contributors. The price action of UNI also reflected the overall slowdown of DEX trading in 2022 and 2023.

The Uniswap activity expanded in the past year, reaching a peak in November with $118M in fees. The DEX operates with a net loss, due to paying out incentives to its liquidity providers. It now holds more than $6B in total value locked (TVL), spread around 23 chains. Uniswap Labs is also busy promoting its native Unichain to builders, aiming to shift some of the DEX traffic. 

Uniswap V3 on Ethereum is still the most active version, with $961M in daily trading volumes. The Uniswap universal router smart contract still burns 5.75% of all gas on Ethereum, with busier days leading to even higher activity. In 2024, the profile of Uniswap activity shifted, as USDC became one of the most widely traded assets. More than $1T in trading volumes came from USDC swaps. 

The DEX has achieved $989.81M in fees for the year to date, potentially ending 2024 with more than $1B in total fees. Uniswap has surpassed Solana and is almost on par with Lido Finance.