ShibaSwap vs Uniswap, Which Provides the Most Opportunity for Passive Income?
ShibaSwap is the decentralized cryptocurrency exchange for the Shiba Inu ecosystem. It’s a platform where buyers and sellers can trade between the Shiba tokens. The SHIB―its native token follows after Dogecoin, a joke or meme cryptocurrency mostly backed by Elon Musk.
Similarly, Uniswap is a decentralized cryptocurrency exchange running on the Ethereum blockchain. Decentralized exchanges are not governed by a singular or central authority, which results in increased user participation and faster transactions.
In this article, we’d look at ShibaSwap and UniSwap briefly. Then we’d dive into and compare the passive income opportunities they offer.
What is ShibaSwap, and How Does it Work?
Launched on July 6, 2021, ShibaSwap, is the decentralized exchange of the Shiba Inu token. By “Decentralized,” we mean that it isn’t owned or governed by a single or central entity, unlike centralized exchanges like Binance and Coinbase.
The decentralized exchange allows for trustless transactions where you can run your transactions without needing intermediaries or go-betweens to make them happen. ShibaSwap runs on the Ethereum blockchain and facilitates the exchange of Shiba Inu coins and other cryptocurrencies.
These Shiba Inu coins include SHIB, LEASH, and BONE. Interestingly, there are several ways through which users can participate in this relatively new decentralized exchange platform. Participants can Dig, Fetch, Swap, Bury, and Woof. Continue reading to grasp those in greater detail;
You can bury or stake your tokens on ShibaSwap to earn Woof Returns that are proportional to your contribution to the staking pool. Staking involves locking up a fraction of your crypto coins for a specific period to support the security and operations of the blockchain.
By staking SHIB, LEASH, OR BONE, you earn the tokens xSHIB, xLEASH, or tBONE, which represent your share of the staking pool. Interestingly, Woof returns are released weekly. However, the longer you leave your tokens staked, the more returns you’d receive. Conversely, regularly staking and unstaking will reduce your long-term gains.
The Bury feature has a process that ensures transparent distribution of returns among holders that functions independently for each token–xSHIB, xLEASH, and tBONE. You can retrieve 33% of your Woof Returns every week, but the other 67% remains locked for 6 months.
As its name implies, the Swap feature allows you to swap tokens on the Ethereum network for other tokens. What’s interesting is that you can swap ETH for Shiba and other tokens. It has a very simple and easy-to-use interface that makes it fun to swap tokens.
The Dig Feature is all about providing liquidity. Being a liquidity provider involves funding a liquidity pool with your crypto assets to support trading, thereby earning passive income on your deposit. As a liquidity provider on ShibaSwap, you earn BONE rewards on trades proportional to your share of the pool. Your returns accrue in real-time, they are added to the pool, and you can claim them by withdrawing your liquidity.
You saw how to earn from DIGGING above. However, you must deposit your ShibaSwap Liquidity Provider tokens in the allocated pair box to claim your rewards. The process of depositing or withdrawing your SSLP to claim your pending BONE rewards is called WOOFING.
Bonefolio is all about analytics called “dogalytics.” It features an interface that shows Sushi Liquidity Pairs, BONE reward pools, and individual tokens with columns displaying liquidity, 24 hours and 7 days trading volume, and fees (24hours, 7 days, and yearly).
It’s so interesting to know that ShibaSwap also features an NFT marketplace where you can buy, sell, and trade up to 10,000 peculiar Shiboshis. The Shiboshi NFTs were released on October 14 by 5:30PM EST, according to Shytoshi Kusama, the Shiba project lead. After the Shiboshi release, Kusama also said to expect a Shiba-based NFT game named Oshivere to be launched in the future.
What is Uniswap and How Does it Work?
Uniswap is one of the most recognized Ethereum-based DEXs (decentralized exchanges). It is a protocol designed for trading ECR-20 tokens and creating liquidity on the Ethereum blockchain. It follows an AMM (automated market maker) model. The model allows automatic and permissionless digital asset trading using liquidity pools instead of traditional trading involving buyers and sellers.
Here’s how it works: as an AMM user, you supply liquidity pools with your crypto coins. And the prices are dependent upon a mathematical formula. Think of AMMs as bots that use constant algorithms to provide you prices between digital assets pairs.
Since AMM eliminates the buyer-seller model, trading time reduces considerably on DEXs using the model. Again, by eliminating the need for KYC verifications, these AMM-oriented exchanges create more liberal platforms where more people can perform decentralized token swapping.
Launched in November 2018, Uniswap, one of the pioneering successful DeFi protocols, has laid the foundation for other DEXs that borrow its features. A popular example is PancakeSwap, an offspring chain of Uniswap which also runs on the Ethereum blockchain.
As of October 16, 2021, Uniswap had a TVL of 3.15 billion and a 24-hour trading volume of $1.6 billion. Its latest version Uniswap V3, was launched on Ethereum on May 5th, 2021. Uniswap has a governing token called UNI, which was released in September 2020. As of October 16, 2021, UNI ranks 11th on Coinmarketcap, with a market capitalization of $16,984,970,339.
The big question now is: Can you earn crypto on Uniswap? Or, are there passive income opportunities on Uniswap? Let’s find out.
Passive Income Opportunities on Uniswap
Earning on Uniswap is mostly from providing liquidity, i.e., investing your crypto coins in liquidity pools to facilitate trading on the platform. The latest version Uniswap V3 features some interesting improvements to the protocol, the most significant being “Concentrated Liquidity” to improve capital efficiency.
We are talking about a whopping 4,000X more capital efficiency, way better than what was obtainable in the former versions V1 and V2. The implication is that your tokens are put to work more efficiently. As a result, you earn a lot more rewards for providing liquidity in Uniswap V3.
But, not so fast now! Suppose you look to provide liquidity as a new user. In that case, you might want to understand the essentials of Uniswap V3―setting your price ranges, using the proper fee tier, representing your LP (Liquidity Pool) position, etc.
In the previous Uniswap V1 and V2, you get ECR-20 tokens representing your liquidity position in the pool. However, V3 brings something new and interesting to the table. You receive NFTs (Non-Fungible Tokens) representing your Uniswap V3 liquidity positions. Each liquidity position comes with a “unique piece of on-chain generative art,” according to the V3 mainnet post.
These NFTs simplify the representation of LP positions in particular price ranges. It’s a groundbreaking innovation in DeFi, which before Uniswap V3, represented LP positions using ECR-20 tokens. Interestingly, you can claim your NFT for the digital assets you invested in the pool.
Experts advise against selling your Uniswap NFT on marketplaces like Rarible or OpenSea, as you may sell it for way less than it’s worth in actual liquidity. To begin providing liquidity on Uniswap,
- Visit Uniswap’s web app to exchange and select your preferred pair through the Pool dashboard.
- Select your referred fee tier between 0.05% LP fee and 1% LP fee
- Choose the price range within which you want to provide liquidity
- Enter how much you’re willing to use as your capital, approve the router contract, and deposit your capital with a transaction. Transaction completed? You’re now a Uniswap V3 LP
- You’ll get a Uniwap V3 NFT LP token. Watch after it carefully as it represents and helps you redeem your liquidity pool position at your discretion.
Aside from providing liquidity, swapping ECR-20 tokens is the other basic utility on the Uniswap interface.
Summing It Up
From the review in the paragraphs above, ShibaSwap seems to have more passive income opportunities than Uniswap. Shibaswap features two major passive income opportunities―BURYing and DIGGing, which stand for staking and providing liquidity respectively. Whereas, Uniswap is mostly about providing liquidity on the Uniswap Interface. We look forward to more passive income opportunities on these DeFi platforms soon.