Following what appears to be the actions of a single whale, the price of ETH skyrocketed to just under $450 according to the Uniswap v2 ETH/USDC price ticker in late trading on August 10. This represented an increase upwards of 15%.
The trade involved a series of swaps totaling almost $18 million in USDT to purchase just over 40,000 ETH. Within a couple of hours, the price of Ethereum had returned to its range-bound channel at around $395.
Realt Platform COO, David Hoffman, postulated that it was either a single part of a greater DeFi arbitrage transaction or someone wanting a non-KYC long position on Ethereum.
Big Transaction, Big Price
Developer Adam Tyree Finch added that the transaction resulted in the loss of around $2 million due to slippage, and it was unlikely to be an arbitration attempt as there are better methods than using automated market makers such as Uniswap. Laundering money this way would also be traceable, he added.
Delving deeper into the address used it was ascertained that the ETH was moved to what appeared to be Binance and the Tether used to buy it came from Huobi originally.
Partner at Cinneamhain Ventures, Adam Cochran, stated that the slippage, which worked out at almost 11%, wasn’t that bad;
“The most impressive part here is the slippage wasn’t actually that bad! Don’t get me wrong it was a lot but no DEX could have handled that slippage a year ago.”
The questions as to why someone would do this at such a high cost continued to flow along with the speculation that they may have been really trying to avoid any KYC requirements associated with centralized exchanges that have much greater liquidity and less slippage.
DeFi Liquidity in Question
The outcome of it all is the confirmation that DeFi is still not liquid enough to facilitate such large transactions and a high price will be paid for whales wanting to take this route.
Uniswap volumes have been surging, however, as observed by financial writer Zack Voell who pointed out that the decentralized token swapping protocol is catching up with the centralized crypto exchanges.
Uniswap did $167M in volume over the last 24 hours. That’s 82% of Bitstamp, 76% of Bitfinex, almost 50% of Kraken, and more than Bitso, Bittrex, and Gemini combined.
Pretty incredible TBH.
— Zack Voell (@zackvoell) August 11, 2020
DEX volumes are increasing and may even surpass those seen in CeFi even if slippage is still huge by comparison.