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This is why Uniswap's data is much more valuable than centralized exchanges. On-chain trading permits a degree of transparency and trustworthiness not readily

This is why Uniswap's data is much more valuable than centralized exchanges. On-chain trading permits a degree of transparency and trustworthiness not readily feasible with centralized exchanges. Centralized exchanges are incentivized to doctor their data and lie about their volumes. The larger the volumes an exchange publishes, even if fake or gamed, the more relevant an exchange appears. Users must blindly trust whatever data exchanges can manufacture. Uniswap charges a flat fee to every trade for all user. It's objective. There's no special back room trading rates, there's no ability to lie about volumes, there's no bonus for having high frequency bots trading. If you want objective data, Uniswap (and other on-chain exchanges) are truthful.

makotobestgirl 5y ago
~80% of pools and tokens on Uniswap are scams and rug pulls and it's even harder to figure out what's real.
- Zamicol 5y ago
  Useless/scam tokens are a problem, but it's not specific to Uniswap. That's a problem inherent to permitting anyone to create a new token, like with ERC-20 tokens. If you want to trade useful tokens, Uniswap's data is the most truthful. It's not that the system can't be gamed, it's that he costs of gaming are transparent and predictable.
  - greatjack613 5y ago
    I use https://cmcsnipe.com/honeypot https://cmcsnipe.com/honeypot to check for scams, easily detects if a token is a honeypot.
capableweb 5y ago
I'm generally pro-cryptocurrencies, but Uniswap definitly makes it harder to see wash trading, not easier. One wallet !== one person, while the regulated, centralized exchanges normally require you to answer bunch of questions and prove your identity because of KYC/AML laws, to guarantee that each participant is just that, one participant.
- gruez 5y ago
  Yeah, decentralized exchanges really only protects against one type of wash trading (ie. from the exchange, to make it look more liquid than it really is).
- habitue 5y ago
  Yeah, the ability to generate identities on the fly and interact with the financial system immediately is one thing that would give financial regulators a heart attack. I wonder if it's actually (free identities) XOR (no wash trading), or if the crypto people will come up with some clever way to account for it or disincentivize it. One thing I've learned is not to count out very resourceful people with skin in the game. Crypto has come up with some really interesting incentive games that I certainly wouldn't have thought of off the top of my head. That being said, this seems like a really hard thing to fix.
- gomox 5y ago
  Actually with gas costs being what they are, wash trading is extremely costly on Ethereum DEXs, which makes their volume much more reliable. Wash trading relies on low/nonexistent fees to be cost effective as a market signal.
  - catern 5y ago
    Interesting! That reminds me of the argument that market manipulation makes markets more efficient by increasing the reward available to honest participants. Wash trading being discouraged by high trading fees doesn't have the same incentive structure, but I wonder if you could arrange it the same way?
- deleted 5y ago
  [deleted]
koolba 5y ago
> Uniswap charges a flat fee to every trade for all user. Not flat. It’s a percentage of the trade value. > If you want objective data, Uniswap (and other on-chain exchanges) are truthful. Transaction costs limit on-chain exchange wash trading to some degree, but it doesn’t stop price manipulation. The on-chain aspect has an interesting issue in that during periods of high volatility the network itself gets both slower and more expensive, so an end user may not even get to execute a trade.
- dannyw 5y ago
  If I trade heaps on Bitfinex I get lower rates. Like a 100k trader might pay 0.2%, but a 10m trader pays 0.05%. Uniswap is the same for all.
  - koolba 5y ago
    That’s “uniform”, not “flat”.
teitoklien 5y ago
.... People pay for volume on uniswap daily ... They just spin up new wallets and keep making them exchange very high amounts of a token (10ETH buy , 10 ETH sell , multiple times) (net expense is just the gas fees, but they get paid wayyy more to do this). This is usually done to get uniswap traded tokens onto various trending lists like cmc , dextools , etc. I’d say there is 10-40x the fraud on uniswap than on centralised exchanges, its just that on uniswap if you know where to look, you can transparently see the fake volume being created in front of you. But for human traders, it can be tricky sometimes.
- joshfraser 5y ago
  That doesn't pass the smell test. Sure, you can wash trade on Uniswap, but it's expensive and everyone can see you doing it. The fee on most pools on Uniswap is 0.30%. In contrast, wash trading on most centralized exchanges is cheap or free and very hard to prove unless you have access to their internal data.
  - teitoklien 5y ago
    Im specifically talking about up and coming , memecoins. The liquidity pool on these are usually provided by token owner themselves, fee doesnt matter there (gas fees does, but they make much much more by doing this). Tokens like these need these fake volumes to get the necessary amount of holders , publicity and volume to qualify to be listed on centralised exchanges. Even when everyone can see you do it, owners of popular trending lists which list these tokens, intentionally look the other way on this wash trading and just need it for fulfilling listing requirements.
    - joshfraser 5y ago
      You can't do it without putting significant capital at risk since you also have to supply the other side of the pair. If there is no organic demand for your memecoin, people will be happy to dump it and take your ETH.
      - 5y ago
latchkey 5y ago
Take a deep dive into MEV (miner extractable value). Poorly named for what it is, but I think it is something that you're missing in this picture.
- throwawaygh 5y ago
  > Miner extractable value (MEV) is a measure of the profit a miner can make through their ability to arbitrarily include, exclude, or re-order transactions within the blocks they produce. Um. Wow. So... how much of crypto is just "things that are illegal to do with anything that's not crypto"?
  - MisterBastahrd 5y ago
    Crypto is a ponzi scheme that everyone is in on. Introduce a new coin, sell it for a trillionth of a penny, and hope enough people buy it that you can cash out for a billionth of a penny.
  - legutierr 5y ago
    There is a meaningful difference between this kind of miner intervention and the kind of intervention that might be problematic in a centralized context. Provided there is sufficient decentralization within a blockchain network (i.e. enough independent miners participating) no individual miner will be able to pursue a MEV strategy beyond a single block. The next block will be created by a different miner. In addition, the right to include any transaction or to control the ordering of transactions depends on the miner winning the right to build the block via the consensus process (for instance, by being first to calculate the PoW). In a sufficiently decentralized network, it is unlikely that any one miner will have any certainty at all with regards to when they will actually be able to build a new block. Depending on the level of centralization, it is also the case that a particular miner will get to mine a new block infrequently at best. So the worst that a particular miner can do will be to delay the inclusion of a transaction, because any other miner can choose to include the same transaction in a subsequent block. Excluding transactions is outright impossible without buying out the entire capacity of the network by paying massive gas fees to other miners. And because there is no predicting when the power to choose the ordering or inclusion of transactions will be granted to a particular miner, any miner intervention strategy will need to be both opportunistic and somehow viable within the scope of only one block. Keep in mind as well that Ethereum blocks occur less than once every 15 seconds.
chizhik-pyzhik 5y ago
Uniswap data is more reliable because of gas fees, which are upwards of $50 per trade recently.
runeks 5y ago
> The larger the volumes an exchange publishes, even if fake or gamed, the more relevant an exchange appears. Only to unsophisticated traders, since past volume (liquidity) isn’t worth anything right now. What you really want to look at is market depth, ie. the quantity of outstanding open orders in the order book. > Users must blindly trust whatever data exchanges can manufacture. Contrary to past volume, open order book orders need not be trusted. Users can test this figure by executing a market order against it and observing the execution price. If there’s always a discrepancy between the two then either the exchange is lying about its order book depth or is susceptible to front running.

makotobestgirl 5y ago

~80% of pools and tokens on Uniswap are scams and rug pulls and it's even harder to figure out what's real.

Zamicol 5y ago
Useless/scam tokens are a problem, but it's not specific to Uniswap. That's a problem inherent to permitting anyone to create a new token, like with ERC-20 tokens. If you want to trade useful tokens, Uniswap's data is the most truthful. It's not that the system can't be gamed, it's that he costs of gaming are transparent and predictable.
- greatjack613 5y ago
  I use https://cmcsnipe.com/honeypot https://cmcsnipe.com/honeypot to check for scams, easily detects if a token is a honeypot.

capableweb 5y ago

I'm generally pro-cryptocurrencies, but Uniswap definitly makes it harder to see wash trading, not easier. One wallet !== one person, while the regulated, centralized exchanges normally require you to answer bunch of questions and prove your identity because of KYC/AML laws, to guarantee that each participant is just that, one participant.

gruez 5y ago
Yeah, decentralized exchanges really only protects against one type of wash trading (ie. from the exchange, to make it look more liquid than it really is).
habitue 5y ago
Yeah, the ability to generate identities on the fly and interact with the financial system immediately is one thing that would give financial regulators a heart attack. I wonder if it's actually (free identities) XOR (no wash trading), or if the crypto people will come up with some clever way to account for it or disincentivize it. One thing I've learned is not to count out very resourceful people with skin in the game. Crypto has come up with some really interesting incentive games that I certainly wouldn't have thought of off the top of my head. That being said, this seems like a really hard thing to fix.
gomox 5y ago
Actually with gas costs being what they are, wash trading is extremely costly on Ethereum DEXs, which makes their volume much more reliable. Wash trading relies on low/nonexistent fees to be cost effective as a market signal.
- catern 5y ago
  Interesting! That reminds me of the argument that market manipulation makes markets more efficient by increasing the reward available to honest participants. Wash trading being discouraged by high trading fees doesn't have the same incentive structure, but I wonder if you could arrange it the same way?
deleted 5y ago
[deleted]

koolba 5y ago

> Uniswap charges a flat fee to every trade for all user. Not flat. It’s a percentage of the trade value. > If you want objective data, Uniswap (and other on-chain exchanges) are truthful. Transaction costs limit on-chain exchange wash trading to some degree, but it doesn’t stop price manipulation. The on-chain aspect has an interesting issue in that during periods of high volatility the network itself gets both slower and more expensive, so an end user may not even get to execute a trade.

dannyw 5y ago
If I trade heaps on Bitfinex I get lower rates. Like a 100k trader might pay 0.2%, but a 10m trader pays 0.05%. Uniswap is the same for all.
- koolba 5y ago
  That’s “uniform”, not “flat”.

teitoklien 5y ago

.... People pay for volume on uniswap daily ... They just spin up new wallets and keep making them exchange very high amounts of a token (10ETH buy , 10 ETH sell , multiple times) (net expense is just the gas fees, but they get paid wayyy more to do this). This is usually done to get uniswap traded tokens onto various trending lists like cmc , dextools , etc. I’d say there is 10-40x the fraud on uniswap than on centralised exchanges, its just that on uniswap if you know where to look, you can transparently see the fake volume being created in front of you. But for human traders, it can be tricky sometimes.

joshfraser 5y ago
That doesn't pass the smell test. Sure, you can wash trade on Uniswap, but it's expensive and everyone can see you doing it. The fee on most pools on Uniswap is 0.30%. In contrast, wash trading on most centralized exchanges is cheap or free and very hard to prove unless you have access to their internal data.
- teitoklien 5y ago
  Im specifically talking about up and coming , memecoins. The liquidity pool on these are usually provided by token owner themselves, fee doesnt matter there (gas fees does, but they make much much more by doing this). Tokens like these need these fake volumes to get the necessary amount of holders , publicity and volume to qualify to be listed on centralised exchanges. Even when everyone can see you do it, owners of popular trending lists which list these tokens, intentionally look the other way on this wash trading and just need it for fulfilling listing requirements.
  - joshfraser 5y ago
    You can't do it without putting significant capital at risk since you also have to supply the other side of the pair. If there is no organic demand for your memecoin, people will be happy to dump it and take your ETH.
    - 5y ago

latchkey 5y ago

Take a deep dive into MEV (miner extractable value). Poorly named for what it is, but I think it is something that you're missing in this picture.

throwawaygh 5y ago
> Miner extractable value (MEV) is a measure of the profit a miner can make through their ability to arbitrarily include, exclude, or re-order transactions within the blocks they produce. Um. Wow. So... how much of crypto is just "things that are illegal to do with anything that's not crypto"?
- MisterBastahrd 5y ago
  Crypto is a ponzi scheme that everyone is in on. Introduce a new coin, sell it for a trillionth of a penny, and hope enough people buy it that you can cash out for a billionth of a penny.
- legutierr 5y ago
  There is a meaningful difference between this kind of miner intervention and the kind of intervention that might be problematic in a centralized context. Provided there is sufficient decentralization within a blockchain network (i.e. enough independent miners participating) no individual miner will be able to pursue a MEV strategy beyond a single block. The next block will be created by a different miner. In addition, the right to include any transaction or to control the ordering of transactions depends on the miner winning the right to build the block via the consensus process (for instance, by being first to calculate the PoW). In a sufficiently decentralized network, it is unlikely that any one miner will have any certainty at all with regards to when they will actually be able to build a new block. Depending on the level of centralization, it is also the case that a particular miner will get to mine a new block infrequently at best. So the worst that a particular miner can do will be to delay the inclusion of a transaction, because any other miner can choose to include the same transaction in a subsequent block. Excluding transactions is outright impossible without buying out the entire capacity of the network by paying massive gas fees to other miners. And because there is no predicting when the power to choose the ordering or inclusion of transactions will be granted to a particular miner, any miner intervention strategy will need to be both opportunistic and somehow viable within the scope of only one block. Keep in mind as well that Ethereum blocks occur less than once every 15 seconds.

chizhik-pyzhik 5y ago

Uniswap data is more reliable because of gas fees, which are upwards of $50 per trade recently.

runeks 5y ago

> The larger the volumes an exchange publishes, even if fake or gamed, the more relevant an exchange appears. Only to unsophisticated traders, since past volume (liquidity) isn’t worth anything right now. What you really want to look at is market depth, ie. the quantity of outstanding open orders in the order book. > Users must blindly trust whatever data exchanges can manufacture. Contrary to past volume, open order book orders need not be trusted. Users can test this figure by executing a market order against it and observing the execution price. If there’s always a discrepancy between the two then either the exchange is lying about its order book depth or is susceptible to front running.