Can Uniswap Reach $1000?

(Updated 10. September 2022)

Uniswap represents a breakthrough in the crypto markets, being one of the catalysts of the DEFI revolution. It has done great until now, but can Uniswap reach $1000 at some point in the future?

My scenario allowed Uniswap to reach $1,000 if volume, and consequently revenue, increased by roughly 670% while its market-cap-to-revenue ratio resembled comparable projects.

Let's get into how and why Uniswap can reach $1000, and how realistic it is:

Is It Realistic That Uniswap Reaches $1000?

Uniswap is a decentralized exchange where you can swap ERC-20 (Ethereum-based) tokens.

The way to evaluate a project like this is to look at its number of users and the revenue produced (fees paid).

On Uniswap, the fee you pay for swapping tokens is 0.3%. This means that Uniswap produces revenue of 0.3% of the total volume (amount of swapped value).

Below you see a chart showing the monthly volume on Uniswap from May of 2021 to August of 2022:

It is impressive that even the volume is close to 50 billion USD, even though the bear market.

Here's how we're going to use this info to figure out if Uniswap can reach $1,000:

1. We're going to figure out the relationship between revenue and the market cap of other similar projects.

2. Calculate how much revenue Uniswap needs to reach a market cap corresponding to a $1,000 price

3. Calculate what volume corresponds to that revenue

#1 Ratio Between Market Cap and Annual Revenue:

I've calculated this for Uniswap's current market cap and revenue, together with Coinbase and PancaceSwap:

(sources: https://info.uniswap.org/, https://www.nasdaq.com, https://backlinko.com/, https://messari.io/asset/pancakeswap)

The data on Coinbase is from 2021 and the data on the other two is from August of 2021 to August of 2022.

In the table below you'll see the actual numbers:

From the numbers above, we can say that a ratio between 8-10 is reasonable. In other words, it is not unreasonable to expect the market cap to go 10x higher than the revenue.

The numbers above, at least for the two crypto projects, are mainly from a bear market. Looking at the bull market, the MC/R ratio was closer to 50.

We'll continue to the next step with both of these ratios in mind: 8-10 for the bear market, and roughly 50 for the bull market.

Related analysis: Uniswap vs PancakeSwap

#2 Required Revenue For Uniswap to reach $1,000:

For Uniswap to reach $1,000, it needs a market cap of $1,000/UNI * 760,000,000 UNI = $760,000,000,000.

This calculation is based on: "Market Capitalization" = "Price per coin" * "number of coins in circulation".

So, for Uniswap to reach $1,000 per coin, its market cap needs to reach roughly $760 billion.

Assuming an MC/R ratio of 8-10, as is reasonable in a bear market, the revenue then needs to be $76 billion.

Assuming an MC/R ratio of 50, as is reasonable in a bull market, the revenue then needs to be $15.2 billion.

Let's now figure out how much volume is needed for Uniswap to reach such revenues:

#3 Requered Volume For Uniswap To Reach $1,000:

Remember, the revenue is equal to 0.3% of the volume. Thanks to math, we can calculate the needed volume like this:

Needed volume = Revenue / 0.003

**Here's the calculation for the bear market estimations:

Needed annual volume = $76,000,000,000 / 0.003 = $25.3 Trillion.**

**Here's the calculation for the bull market estimations:

Needed annual volume = $15,200,000,000 / 0.003 = $5.3 Trillion.**

Uniswap reaching an annual volume of $25 trillion isn't happening any time soon...

But, $5 trillion might actually be possible. Here's a comparison of the current annual volume vs the $1,000/Uni volume:

The current annual volume is roughly $650 Billion. To reach $5 Trillion, the volume needs to increase 669% - not impossible!

Conclusion: Yes, Uniswap Can Reach $1000

My conclusion was that Uniswap could reach $1,000 if volume increased by 669% and its market-cap-to-revenue ratio reached a level similar to Coinbase and PancakeSwap. The scenario depended on bull-market conditions.

If Uniswap reaches $1,000, its market cap would be $760,000,000,000, which is within the realm of possibilities.