February 28th, 2024

Will UNI’s 70% Rally Last? Risks of Uniswap’s Fee Proposal

Leading decentralized exchange (DEX) Uniswap’s UNI token received a massive boost in late February 2024 following a proposal to share platform fees with token holders who delegate and stake their tokens.

Following the announcement, UNI jumped over 70% to a near two-year high of $12.79 on February 24 on expectations of higher demand and lower UNI circulating supply from increased staking on the platform.

Will the latest news affect the long-term Uniswap (UNI) price prediction?

In this article, we analyze Uniswap’s fee-sharing proposal and highlight risks that could cut short the token’s rally.

Uniswap’s Fee Switch Upgrade to Reward UNI Holders

On February 23, 2024, the Uniswap Foundation proposed a network upgrade to implement a fee mechanism that rewards UNI token holders that have delegated and staked their tokens.

The Uniswap Foundation said that the proposed fee mechanism upgrade seeks to invigorate Uniswap’s governance system by incentivizing token delegation and staking.

“Less than 10% of circulating UNI is used to vote on a given proposal. Further, a large portion of existing delegation is ‘stale.’ As of February 1, 2024, 14 of the top 30 delegates by voting power had not voted over the last 10 proposals, and only 7 of these delegates have ever created a proposal,” said Uniswap Foundation.

How Will Uniswap’s Fee Switch Upgrade Work?

At the time of writing, Uniswap collects 0.3% fees on v2 and 0.05% to 1% fees on v3 for swapping tokens, which are paid to liquidity providers (LP).

If the new fee mechanism is approved, UNI stakers and delegators will receive a part of the LP fees.

The fee mechanism proposal is also known as the “fee switch” upgrade because the collection of protocol fees is actually built into the Uniswap protocol. However, the protocol fee collection was never turned on and was initially set to zero.

Here are key details of the proposed Uniswap fee switch upgrade:

The protocol fees that will be distributed will be expressed as a fraction of LP fees.
The protocol fees will be adjustable by governance and can be 0, 1/4, 1/5, 1/6, 1/7, 1/8, 1/9, or 1/10 of the LP fees.
Protocol fees can be set on a pool-by-pool basis.
Fees are accrued in both tokens that comprise the pool.

Two new smart contracts will be introduced with the new fee mechanism proposal:

1. V3FactoryOwner.sol

This contract will bring a programmatic, permissionless collection of protocol fees. It will also allow the conversion of those fees into a common ERC20 for distribution to stakers.

2. UniStaker.sol

This contract will manage delegation and fee distribution.

Risks to UNI Token Price From New Fee Mechanism Proposal

News of Uniswap’s proposed fee mechanism that rewards UNI stakers and delegators was cheered by the crypto market participants who pushed the UNI token price to its highest since April 2022.

In this section, we highlight events that could cut short Unswap’s explosive rally.

Protocol Fee-Sharing Approval Awaits

UNI token holders have to bear in mind that the proposed fee-sharing mechanism has not been approved as of February 27, 2024.

The Uniswap community will begin voting on the proposal on March 1, 2024. All Uniswap proposals are subject to a 7-day voting period during which UNI token holders can vote for, against, or abstain from voting.

Although it is widely expected that the proposal will get approved (as it benefits UNI holders who are voting), there are certain members of the Uniswap community for whom the new fee mechanism is unfavorable — Uniswap liquidity providers.

Anndy Lian, an intergovernmental blockchain expert, told Techopedia:

“If the proposal is approved, it would activate the protocol fee switch and distribute a portion of the fees collected by Uniswap to the token holders. This would increase the demand and value of UNI and incentivize more participation and delegation in the governance process.

“However, if the proposal is rejected, it could lead to a sell-off and a drop in the UNI price.”

Uniswap Trading Volume, TVL, and Liquidity Expected to Fall on Protocol Fee Sharing

According to a report by crypto analytics firm Gauntlet, the distribution of protocol fees to UNI stakers and delegators can reduce the profitability of LPs on Uniswap.

The reduced LP yield is expected to cause some of them to withdraw liquidity from Uniswap. The less liquidity in Uniswap’s trading pools might result in higher slippages for traders. The higher slippages might cause poor user experience and force traders to choose rival DEXs, which might ultimately result in decreased trade volume on Uniswap.

It should also be noted that lower trade volume might result in lower protocol fees distributed as the platform collects fees when token swaps occur.

Gauntlet warned that setting extremely high protocol fees would result in the DEX being “unable to retain any LPs.”

The research firm also added that core trading volumes from retail and institutional traders will be less affected than MEV volume, which accounts for 40% to 80% of volume on Uniswap and other DEXs, as MEV trades are more sensitive to market liquidity.

Gauntlet noted:

“At the extreme, a 100% protocol fee should result in a 100% loss of all volume, since such a DEX would be unable to retain any LPs. However, even for an extremely aggressive 80% protocol fee, the simulated DEX still retains substantial core volume. This once again highlights that liquidity is rarely a limiting factor for most of Uniswap’s core users.

“We note that for a viable 10-25% protocol fee, the revenue curves are fairly linear and far from the theoretical maximum. We conclude that a protocol fee in this range would be effective at generating revenue and is unlikely to suffer from diminishing returns due to core volume loss.”

Uniswap (UNI) Price Analysis: Is the Rally Short-Lived?

The rally in UNI token price has cooled since the crypto jumped as much as over 70% on February 23, 2024, following the fee switch upgrade proposal announcement. Token holders took the chance to book profit after UNI hit near two-year highs of $12.79.

Blockchain analytics firm Lookonchain reported that a “Uniswap Team/Investor/Advisor wallet” sold 90,000 UNI tokens from $1.03 million in USDC.

Tony Severino, a CMT candidate, technical analyst, and the author of the CoinChartist VIP newsletter, was bullish on the UNI token as he shared his technical analysis on the crypto:

“UNI’s over 50% single-week surge might only be the beginning of a sustained trend change. The clean breakout above the weekly and monthly upper Bollinger Band is a technical buy signal following a nearly two-year accumulation range.”

Elsewhere, CoinCodex data showed UNI token trading at an overbought zone as its 14-day relative strength index stood at 75 points on February 27, 2024. The token traded at $10.05 at the time of writing, above its 200-day simple moving average of $5.68.

The Bottom Line

Uniswap’s fee switch proposal is expected to have lasting consequences if approved.

Although the crypto market is currently focused on the direct benefits that UNI holders hope to enjoy, the resulting effects on Uniswap governance from an approved fee switch upgrade cannot be understated.

The upgrade is expected to incentivize “active, engaged, and thoughtful delegation,” which will ultimately make Uniswap more decentralized, resilient, and community-driven.

Source: https://www.techopedia.com/uniswap-uni-price-analysis

Anndy Lian

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com

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February 24th, 2024

$RNDR Token Surges to a 2-Year High – But Can the Momentum Last?

Peer-to-peer GPU computing network Render (RNDR) surged to a two-year high on February 23, fueled by optimism about the growing demand for generative artificial intelligence (genAI) and image-rendering services.

Over the last month, Render has gained over 100%, aided by two key developments that were instrumental in helping AI crypto coins like RNDR token outperform the rest of the market — chipmaker Nvidia’s record-breaking quarterly earnings and the launch of OpenAi’s text-to-video AI product Sora.

Are you interested in adding it to your portfolio and looking for an RNDR token price prediction?

In this article, we will analyze the RNDR token price performance and explain why the Render token is going up.

Key Takeaways

RNDR token price surged 480% from September 2023 to an over two-year high of $7.96 on February 23.
Nvidia’s record-breaking quarterly earnings and the launch of OpenAi’s text-to-video AI product Sora have helped AI cryptos rise.
Render’s integration with Apple’s RealityKit 2 has driven demand for its services.
RNDR’s 14-day relative strength index (RSI) stood over 87 points, indicating an overbought asset.

What Is Render (RNDR)?

In this section, we summarize the Render Network to help you decipher whether the Render token is a good investment for you.

Render is a decentralized marketplace for GPU computing power. The network provides near real-time computing power for 3D rendering tasks, AI and machine learning (ML) training, and complex computations.

Render was launched in 2009 by Jules Urbach, who is the founder and CEO of a Los Angeles-based cloud graphics company, OTOY. The Render Network team is backed by OTOY.

In October 2017, Render conducted its first token sale of the RNDR token. Render launched its mainnet on Ethereum (ETH) in April 2020.

In November 2023, Render successfully completed its migration from Ethereum to Solana (SOL).

A global investment firm VanEck stated in a report:

“Render, who recently migrated to Solana, was initially focused on connecting artists to decentralized groups that would provide GPU power to render images and videos. However, Render has begun to focus its decentralized GPU fleet on satisfying machine-learning workloads to support deep-learning models.”

How Does Render Work?

Rendering is the process of generating two-dimensional or three-dimensional images using a computer program. It is used to create images, videos, animations, simulations, visual effects, virtual reality, and video games. Rendering requires GPU or CPU computing power to process the images.

The Render Network allows GPU owners to loan out their computing power to creators and developers in need of it. In return, GPU service providers earn RNDR tokens for processing artists’ rendering needs. Creators have the option to pay for their rendering job in fiat or RNDR.

GPU providers need to build their reputation over time to receive higher job volumes by completing tasks in a timely and accurate manner. Render users also have reputation scores that help the network reduce unintentional congestion from failed renders or malicious activity.

Render charges a 5% network fee on all transactions, which is used to cover network operating costs.

Why Is Render Token Going Up?

Render has been on a tearing run since September 2023. RNDR token price has surged 480% from $1.372 on September 1, 2023, to an over two-year high of $7.96 hit on Feb. 23, 2024.

Tony Severino, a CMT candidate, technical analyst, and the author of the CoinChartist VIP newsletter, told Techopedia:

“RNDR is up over 20% on the heels of NVDA earnings, but could have a lot more upside ahead. RNDR’s current all-time high is $8.75 per token. Today, RNDR is trading at roughly $7.17 — only around 15% from the previous peak. Considering the strength in RNDR and growing demand for GPU processing power, new all-time highs are highly probable.”

Here are some key Render token news and reasons why the token has seen such strong price action.

Complex Rendering Jobs Boost Demand for Render’s GPU Computing Services

2023 was a big year for Render as the GPU marketplace saw demand for its services spike due to growth in complex, large-scale displays, spatial rendering, and extended reality (XR) jobs.

In its Q4 2023 report, Render noted that Apple’s foray into the XR field with the Apple Vision Pro was a demand driver for intensive rendering jobs required for stereoscopic content, higher frames, better resolutions, and increased field of view.

The network also added that it carried out the first large-scale display and spatial rendering job for the Las Vegas Sphere during the quarter.

In a note to Techopedia, Anndy Lian, Intergovernmental Blockchain Expert, explained:

“The main reason why Render token has exploded is because of its AI and GPU/Nvidia’s narratives. The partnership with Apple also gives credibility and opens up a huge market opportunity for RNDR to showcase its technological edge over competitors.”

In 2023, Render saw the total number of frames rendered increase by nearly 14% year-on-year to 9,972,981 frames.

Meanwhile, the amount of total RNDR tokens used during the year reached 2.7 million tokens in 2023 compared to 1.85 million in 2022, leading to an increase of 850,494 RNDR used.

Nvidia’s Record Earnings Back AI Hype

On February 21, 2024, GPU chipmaker Nvidia said Q4 2023 revenue jumped 265% year-on-year to a record quarterly revenue of $22.1 billion on the back of demand surge for its chips. The optimism from Nvidia’s blockbuster earnings spilled over to the crypto markets, causing GPU computing tokens like RNDR and Akash (AKT) to surge as well.

Jensen Huang, founder and CEO of Nvidia, said:

“Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries, and nations.”

More importantly, Nvidia signaled continued strong demand for its GPU chips in its outlook for the first three months of 2024.

The company expected quarterly revenue to rise to $24 billion, up from $22.1 billion posted in the last quarter of 2023.

Launch of OpenAI’s Text-to-Video Sora Signals Growing Demand for Rendering

OpenAI’s text-to-video generative AI model called Sora was unveiled on Feb. 15, 2024. Sora is capable of generating videos of a minute’s length with multiple characters, motion, details, and backgrounds. The complex nature of computing required to convert text-to-video and train AI models to improve their results is widely expected to increase the demand for computing resources.

It was not surprising to see AI cryptos surge on the news.

Some crypto projects, like the decentralized video infrastructure network Livepeer (LPT), even announced that it would bring Sora capabilities to its network in the coming months for users looking to create generative AI videos.

Livepeer tweeted:

Render Token Price Prediction 2024: Cautiously Bullish?

Anndy Lian believes that the RNDR token is a “promising project” with a clear vision and a strong value proposition.

“It is solving a real-world problem and creating a win-win situation for both creators and providers of rendering resources. It is also leveraging cutting-edge technology and partnering with industry leaders to deliver high-quality and cost-effective rendering solutions.”

However, Lian remains cautious that RNDR price movement could be hampered by Render’s scalability and security vulnerabilities, which are largely dependent on the Layer 1 blockchain a dApp operates on.

Although Render had migrated away from a slower and more congested Ethereum L1 in November 2023, Lian was wary of the uncertainties and operational challenges that Render could face on Solana.

Commenting on the future of Render and RNDR token, Alex Galert, CEO of Brainz, said:

“Render’s potential is vast, especially as AI, VR, AR, and other tech trends continue to grow. While $RNDR has seen significant price appreciation, most of its emissions are completed, making it an attractive choice for those bullish on AI and GPU demand.”

In other RNDR token news, Coincodex was bearish on the RNDR token and expected it to slip to $7.48 in its 3-month Render token price prediction.

At the time of writing, RNDR’s 14-day relative strength index (RSI) stood over 87 points, indicating an overbought asset.

However, Tony Severino believes it could be a positive sign.

“RNDR is a clear crypto market leader with a weekly RSI reading of 83.89. While such a reading can signal overbought conditions, it can also point to substantial strength. Additionally, the weekly RSI is making a higher high, generating another buy signal despite clear overbought conditions. RNDR should continue to show upside performance until the monthly RSI reaches overbought levels. It currently shows a reading of 66.39.”

Looking forward, Servino gives a bullish Render token price forecast:

“If RNDR can exceed its previous all-time high, possible targets include the 1.618 Fibonacci extension, which resides at roughly $66 per token. This represents an over 8x increase from today’s RNDR price. Considering the technical strength, fundamental demand, and buzz around AI, RNDR is a promising crypto project worthy of potential investment.”

The Bottom Line: Is Render Token a Good Investment?

The hype around generative AI has pushed the Render token to near-record-high levels. On February 23, 2024, the RNDR token was less than 10% shy of its all-time high of $8.76.

However, investors might consider investing in the Render token with caution as, like any cryptocurrency, it is extremely volatile and considered a risky investment. Remember that analyst predictions can be wrong.

Always do your own research before investing. This article should not be considered investment advice and is for information purposes only.

Source: https://www.techopedia.com/rndr-token-surges-to-a-2-year-high-but-can-the-momentum-last