Uniswap finally accomplished its vision to serve both ERC-20s and NFTs after releasing its NFT aggregator on November 30, 2022. NFT aggregators combine listings across marketplaces into one interface, allowing users to select the best prices easily.

Two weeks have passed since Uniswap NFT went online. It is one of the four tabs on the Uniswap main page. How did it do? We take a look at Uniswap NFT’s transaction data and discuss whether it is going to make it.

Transaction Data

Uniswap NFT’s first two weeks could have been more impressive.

Both the number of transactions and the number of users peaked within the first two days. Transaction volume has seen some ups and downs, but the trajectory could be better.

On average, the number of transactions decreased by 37% during the second week compared to the first, while the user count went down by 56%. Transaction volume in ETH was down by 26%. If the same trend continues, Uniswap NFT will be looking at a daily average of 17 users and 36 ETH in volume by the end of its first month.

Uniswap NFT’s lackluster performance can be attributed to two reasons: a) its functionality is limited, and b) the incentive mechanism is unattractive.

Limited Functionality

From a product perspective, Genie was not the best-in-class, and rebranding into Uniswap NFT didn’t change that.

First of all, the top value proposition of an aggregator is to provide the best prices. But the price on Uniswap NFT is consistently worse than its competitors.

For example, the floor price of the BEANZ collection on Blur is 0.83 ETH. Its floor price on Gem is 0.85 ETH, but the floor price on Uniswap is 0.92 ETH, an 11% difference.

Blur and Sudoswap usually offer the best prices right now because they don’t charge marketplace fees and make royalty payments optional. Not including Blur affects Uniswap NFT’s ability to provide the best prices. No one will use a service that is similar to its competitors but charges 10% more.

In addition, other functionalities are also limited on Uniswap NFT. For example, it is not possible to search by rarity on Uniswap NFT. Additionally, it provides no analytics and does not allow users to list/sell their NFTs.

Uniswap didn’t build its aggregator from scratch. It acquired Genie in June 2022 and spent over five months integrating it into the existing Uniswap protocol. Scott, the founder of Genie, now serves as the head of NFT product at Uniswap.

Genie was the first NFT aggregator on the market, going live on November 17, 2021. It was an immediate hit because it enabled NFT flippers to batch buy and sell, saving both time and gas fees. Before Genie, NFT buyers had to complete a transaction for each NFT they wanted to buy, which was such a headache for buyers purchasing multiple pieces at once.

However, Genie failed to take advantage of its first mover advantage. Another aggregator, Gem, debuted on Jan 20, 2022 and quickly rose to prominence. Compared to Genie, Gem saved even more gas and delivered new features faster. Soon every NFT trader abandoned Genie and adopted Gem. OpenSea acted quickly and announced its acquisition of Gem only three months after Gem’s initial release. Gem has operated in an independent capacity since the acquisition and remained as the go-to-aggregator.

Uniswap NFT does not offer anything unique. Foundation is the only marketplace that is supported by Uniswap NFT but not by Gem, but only some people use Foundation anyway. If Uniswap NFT does not innovate quickly and roll out features that users actually want, its numbers will only look worse in the future.

Unattractive Incentive Mechanism

Uniswap NFT did not benefit from its incentive mechanism either.

Uniswap NFT offers two incentives to use its platform at launch. First, certain historical Genie users are eligible to receive an airdrop of 300 $USDC, which increases to 1000 $USDC if one also holds a Genie:Genesis NFT.

Second, Uniswap offers a gas rebates program for the first two weeks to encourage people to use the platform. Specifically, the first 22,000 distinct wallets that purchase an NFT during this promotional period will qualify for a rebate on their first transaction. The gas rebate is capped at 0.01 ETH.

Compared to incentive programs in other places, Uniswap’s is mediocre at best. The $USDC airdrop is retrospective and does not stimulate current usage. For example, Blur has designed a comprehensive rewards program that promises to airdrop its token to users. First, it airdrops care packages to all who have traded NFTs in the past six months. But one has to list on Blur to claim. Second, there’s another airdrop to active users of Blur, but one has to set up a collection bid to claim. While Blur’s airdrop is also retrospective, it requires on-going efforts to claim so that it boosts usage.

Gas rebates are cool, but they are both short-lived (only two weeks) and minimal (0.01 ETH, or roughly $12 at the time of writing). The gas saved is easily overshadowed by the worse prices offered on Uniswap NFT.

Designing incentive mechanisms, including an airdrop strategy, is instrumental in bootstrapping a new protocol. But Uniswap has yet to make the best use of it.

The Competitive Landscape

The real battle among aggregators is between Blur and Gem. Others, including Uniswap NFT, are far away. The chart below summarizes the performance of major aggregators during the first two weeks following Uniswap NFT’s launch. OpenSea, X2Y2, etc., are NFT marketplaces, not aggregators, so they are not included. Blur leads by a margin on all metrics, and Gem safely sits in second place. As discussed, Blur dominates simply because it offers the lowest price across the board. It will be interesting to observe how the market reacts if Gem begins to integrate listings on Blur.

NFTNerds and Alpha Sharks stand out from the rest of the crowd on a per-user basis. But both are premium tools that cater to a small group of power users. Ordinary customers can only access all functionalities if they pay for a subscription. Therefore, it is unfair to compare these two with the rest.

Closing Thoughts

Uniswap is one of many major exchanges that look to integrate NFTs. Coinbase NFT famously failed before Uniswap. However, Coinbase built a fully-functional, independent NFT marketplace, whereas Uniswap NFT is an aggregator.

One of the drawbacks of building an aggregator is that it does not generate revenue directly. While OpenSea could charge 2.5% on all transactions, aggregators like Gem and Uniswap NFT are free. As a result, Uniswap can only hope to profit from its NFT functionality indirectly, such as through increased website traffic.

In addition, Uniswap NFT is not good enough at the moment. If the Uniswap NFT team does not step up their game, it may soon find itself next to Coinbase NFT, being analyzed as a bad product made by an otherwise good company.