Uniswap, the largest decentralized exchange operating on the Ethereum blockchain, announced on February 23, 2023, that the platform has begun allowing investors to buy Non-Fungible Tokens (NFTs) using ERC-20 tokens.
The Uniswap protocol took this step to strengthen its growing NFT business following its acquisition of Genie. Moreover, the trading marketplace of NFTs is heating up with new newcomers, such as Blur.
According to Uniswap, there are 2 main challenges right now:
- ‘Not everyone has enough ETH in their wallet. Swapping an ERC20 into W/ETH solely for purchasing an NFT is an avoidable step.’
- ‘Pricing out ETH needed to purchase an NFT and pay for gas can be inexact, leaving behind a dusting of ETH.’
According to the Uniswap team, the platform plans to make it possible for users to buy NFTs with just one ERC-20 token and eventually buy NFTs using other ERC-20 tokens as well.
As reported, this feature will allow investors to avoid converting their ERC-20 tokens to ETH as well as WETH for the sole purpose of buying NFTs, thus making this step useless and helping users save on gas fees.
According to Uniswap’s official website, this feature is made possible by their new Universal Router contract, which integrates token and NFT trades into a flexible and gas-optimized swap router for the first time. The Universal Router finds the most profitable way for investors to trade, inputting ERC-20 tokens to buy tokens, such as ETH, then settles the trade through Opensea’s protocol.
Uniswap DEX announced on June 21, last year, that it had purchased Genie for an undisclosed sum. Genie, founded in 2021 allows users to buy NFTs from multiple marketplaces in a single purchase. This acquisition comes less than 2 months after NFT marketplace OpenSea bought Gem, a competitor of Genie.
Reportedly, in November 2022, Uniswap reported that it had allowed the trading of NFTs on the platform and that it transformed Genie into its NFT aggregator.
Despite this, Uniswap NFT aggregator has seen a rapid downfall in its trading volume and the number of transactions. As reported, the trading volume of the platform dropped from around $246,000 to around $20,000. At the same time, the count of transactions declined from 446 to just 36.
The NFT marketplace has become more competitive, reports suggest. Blur, the latest entrant, has taken the market by storm thanks to its predatory token promotion master plan. Reportedly, it now commands 82% trading volume within just one week.
By joining ERC-20s and NFTs, Uniswap expects to see more innovative intersections of ERC-20 tokens and NFTs in the near future.