By
Godfrey Benjamin
May 28th, 2024
Interface fees on Uniswap are the charges incurred by traders when executing token swaps using the protocol’s wallet interface and web app.
In a bold strategic move aimed at enticing traders away from competitor Uniswap, decentralized exchange PancakeSwap says it plans to offset the fees incurred by users on Uniswap. The total amount it will reimburse users is up to $8 million in fees.
PancakeSwap’s Generous Fee Reimbursement Initiative
The reimbursement initiative, unveiled by PancakeSwap Head Chef Mochi, targets traders who match their Uniswap v3 trading volume 1:1 on PancakeSwap v3. The generous offer will last between May 16 and August 15.
This move follows Uniswap Labs’ decision to increase interface fees from 0.15% to 0.25% for most swaps in April, prompting dissatisfaction among some traders. PancakeSwap is milking the opportunity by providing an alternative to unhappy users seeking alternatives.
According to Mochi, “As a leading multichain DEX, we are here to offer a direct solution, as this campaign promises lower fees, better prices, and refunds for the excess fees paid on other platforms.”
PancakeSwap regularly offers incentives to attract users and motivate its community. In April, it proposed to redirect a portion of CAKE emissions to “bootstrap the veCAKE ecosystem”.
The move then was strategic to increase liquidity flow into the network and improve CAKE incentive efficiency. PancakeSwap is able to achieve this feat based on its primary blockchain. Unlike Uniswap that is powered by Ethereum, PancakeSwap is hosted on the cheaper Binance Smart Chain network.
Besides incentivizing the community, the DEX platform has low and affordable trading fees that enable it to compete with other similar exchanges in the industry. This is despite not being ranked among the top five DEX.
PancakeSwap’s Positioning and Uniswap’s Challenges
Interface fees on Uniswap are the charges incurred by traders when executing token swaps using the protocol’s wallet interface and web app. PancakeSwap’s offer aims to alleviate this financial burden and attract traders with the promise of lower fees and improved pricing.
To qualify for the reimbursement, traders must have held a minimum of $5,000 in Wrapped Bitcoin (WBTC) and/or Wrapped Ethereum (WETH) pairs. They also must have traded on Uniswap’s Ethereum platform between January 1 and March 31.
Eligible traders from Uniswap can verify their campaign eligibility through PancakeSwap’s Dune dashboard and must complete a form to claim the compensation.
As per CoinGecko data, PancakeSwap is the sixth-largest DEX by daily trading volumes. Rating figures show it is trailing behind Uniswap V3 in daily trading volumes by over $700 million. Thus, analysts see the aggressive move to reimburse as a ploy to snatch market share from the competition.
Meanwhile, Uniswap, besides competition, has other challenges to confront. Following the United States Securities and Exchange Commission, SEC’s Wells Notice claiming Uniswap is a broker, Hayden Adams is ready to “fight” back. This is understandable as the notice from the regulatory body affected market sentiments, causing UNI to plummet about 15%.