Uniswap’s business model is under scrutiny due to concerns over its long-term sustainability. Automated market makers (AMMs) like Uniswap simplify token trading but often leave liquidity providers facing losses due to impermanent loss. According to Eric Waisanen, CEO of Astrovault, this flaw threatens the broader DeFi ecosystem.
The lack of profitability for liquidity providers suggests that Uniswap and similar platforms need new incentives to ensure their viability, or risk destabilizing decentralized finance entirely.