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Comparing Uniswap v3 Liquidity with Centralized Exchanges

Article Paradigm research
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Summary

The research compares Uniswap v3 market depth with that of major centralized exchanges for ETH pairs and selected stablecoin pairs. It reports that Uniswap v3 had greater reported liquidity for ETH/USD, ETH/BTC, and ETH/mid-cap pairs, as well as for USDC/USDT. The analysis uses daily average spot depth within two percent of the market price, with different sample periods for ETH/USD and ETH/BTC.

The report also compares expected price impact for larger ETH-to-dollar trades, finding a lower estimated impact on Uniswap v3 than on Coinbase in its example, while noting Coinbase’s slightly lower fees. The authors suggest AMMs may support deeper markets and lower barriers to market creation. These findings are limited by the stated periods and exchange coverage: some centralized venues were omitted because data was unavailable, and the comparison does not establish that the results generalize across assets, market conditions, or execution strategies.

Key ideas

  • The study compares Uniswap v3 spot depth with centralized exchange depth for selected ETH and stablecoin pairs.
  • It reports greater Uniswap v3 depth for the listed pairs during the sampled periods.
  • The analysis uses average market depth within two percent of the market price.
  • Its large-trade example estimates lower price impact on Uniswap v3 despite somewhat higher fees.
  • Some exchanges were excluded due to missing data, limiting the comparison’s coverage.

Tags

CryptoDeFiSpot marketsMarket microstructure

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.