Delta Financial, a new on-chain options layer, is already making a big splash in DeFi—by waging war against Uniswap.
As reported by Decrypt, shortly after Delta launched their DELTA token on Uniswap on March 28, Uniswap’s 24-hour trading volume rocketed up 450%, from $1.2B all the way up to $7.2B. $DELTA accounted for $6.1B, or ~85% of Uniswap’s trading volume that day, despite only having $16.4M in liquidity.
This smashed Uniswap’s previous daily trading volume record of $2.2B on Oct. 26, which was likely driven by an attack on Harvest Finance.
The past few days’ numbers cannot be confirmed by The Defiant, as Uniswap has since altered their analytics to remove data on DELTA. Currently, the Uniswap Analytics tracker shows a much more average 24-hour trading volume of $943M on March 28th.
What’s Really Happening
While Delta’s massive trading volume may look similar to wash trading (ie: manipulating the market by trading the same asset back and forth), it appears to be a result of Delta’s “liquidity rebasing system,” wherein Delta algorithmically raises their token minting prices over time to create a limited supply.
In order to prevent LP dilution, Delta removes 90% of its pool liquidity and repeatedly trades it against the other 10%, increasing the mint price and making their LP token non-dilutable.
Unlike illegal wash trading, Delta’s algorithmic transactions do not cancel each other out.
That said, while not outright manipulation, Delta’s algorithmic interactions with Uniswap do create a skewed view of actual trading volume on Uniswap’s data trackers.
Uniswap Steps In
“Not wash trading but not ‘real’ volume either,” said Uniswap inventor Hayden Adams on Twitter in response to the news of the exchange’s record-breaking daily trading volume. “Soon will be considered untracked volume on uniswap.info.”
Shortly thereafter, Uniswap released a hotfix removing Delta’s data from their tracker, or as a Uniswap engineer put it: “fix for scammy tokens.”
Delta Fires Back
On March 30, a Twitter user posting under the handle “0xRevert” and claiming to be a developer for Delta’s parent company CORE Vault, wrote: “Everyone can now create $20b volume on a custom token! Attack will continue until DELTA trading history is reinstated, and we get [sic] a apology from uniswap for abusing centralized power.”
Indeed, at time of writing, Uniswap’s tracker shows over $23.4B in daily trading volume for March 30.
0xRevert further threatened to open source contracts and instructions on how anyone can generate custom tokens that “create billions of liquidity in stat aggregators.”
In essence, 0xRevert is saying that if Uniswap does not apologize and reinstate Delta’s data on their tracker, they will continue to skew the Uniswap trading volume tracker.
To be sure, DELTA’s tokens are still accessible to exchange on Uniswap. Their data, however, is blacklisted from Uniswap’s tracker.
Regardless of whether or not Delta’s algorithm is messing up Uniswap’s tracker, some DeFi community members say that a decentralized exchange like Uniswap should not be picking and choosing which tokens to blacklist, even if it’s just from their trackers.
“They’ve always left known and confirmed scams on http://uniswap.info and let people lose fortunes on them,” wrote Pavel Hadzhiev on Twitter. “But the moment a project broke their chart, they delist it? It’s funny to see where their morales are at.”
“This should be fairly obvious but saying Uniswap protocol did $7.3b in trading volume on //info.uniswap.org when $6.3b of that is a weird rebasing mechanism on one token makes the entire site less useful,” he wrote.
Indeed, even in a decentralized ecosystem, sometimes developers will feel the need to step in to ensure the usefulness and longevity of their platforms. The line of when and where to cross that barrier, however, remains murky.