PancakeSwap Challenges Uniswap with $8 Million Interface Fee Reimbursement

PancakeSwap, a leading decentralized exchange (DEX) on the BNB Chain ecosystem, has announced plans to reimburse up to $8 million in interface fees paid by traders on the rival platform Uniswap.

PancakeSwap Challenges Uniswap with $8 Million Interface Fee Reimbursement

On the evening of May 16, 2024, PancakeSwap announced a program to reimburse up to $8 million in interface fees that traders had to pay on Uniswap (UNI).

Starting from 7:00 PM on May 16 to 6:59 AM on August 15, 2024, users who executed token swap transactions on Uniswap v3 will be fully reimbursed for their interface fees by PancakeSwap.

This reimbursement program is a direct challenge to Uniswap, following Uniswap Labs' decision to increase interface fees from 0.15% to 0.25% for most swap pairs in mid-April. This increase occurred amidst news of Uniswap founder Hayden Adams potentially facing an SEC lawsuit.

Uniswap interface fees announcement. Source: Uniswap Labs (16/05/2024)

What are Uniswap Interface Fees?

Uniswap interface fees are charges traders incur for executing certain token swap transactions (excluding some stablecoin and wrapped token pairs) when using the protocol's web interface and wallet. Users can avoid these fees by accessing alternative interfaces instead of the ones developed by Uniswap Labs.

Uniswap introduced the 0.15% interface fee on October 17, 2023, to increase revenue. At that time, it was estimated that the new fee could generate about $1 million per day, according to Flipside. Before the interface fee was implemented, users only had to pay the protocol fee, which is currently managed by the DAO.

Eligibility for PancakeSwap Reimbursement:

To qualify for PancakeSwap's reimbursement, cryptocurrency traders must meet the following conditions:

1. Check Eligibility: Verify wallet address eligibility through PancakeSwap's Dune dashboard.
2. Uniswap Transactions: Have executed trades on the Uniswap interface between 7:00 AM on January 1 and 6:59 AM on March 31, 2024, with a cumulative volume of at least $5,000 in wrapped Bitcoin (WBTC) and/or wrapped Ether (WETH) pairs (e.g., WBTC/USDT, WETH/USDC, WETH/WETH, PEPE/WETH) on the Ethereum chain.
3. New PancakeSwap Transactions: Execute new swap orders on PancakeSwap v3 with equivalent volume in WBTC or WETH pairs on Ethereum. PancakeSwap will reimburse the entire Uniswap interface fee.
   • For example, if you traded $1,000,000 on Uniswap's interface from January 1 to March 31, 2024, paying $1,500 in interface fees, you must trade the same $1,000,000 on PancakeSwap v3 with WBTC/WETH pairs during the program period to be reimbursed the $1,500 Uniswap interface fee.
4. Same Wallet Address: Use the same wallet address for transactions on both Uniswap and PancakeSwap.
5. Claim Form: Fill out a form to receive the reimbursement if all criteria are met.

PancakeSwap's Market Strategy:

This interface fee reimbursement program marks PancakeSwap's latest effort to capture market share from Uniswap. Currently, PancakeSwap is the sixth-largest DEX by daily trading volume, trailing Uniswap V3 on Ethereum by over $700 million, according to CoinGecko.

Top DEXs by 24-hour trading volume. Source: CoinGecko (16/05/2024)

Key Highlights:

• Reimbursement Program: Up to $8 million in interface fee reimbursements for Uniswap users.
• Program Duration: From May 16 to August 15, 2024.
• Eligibility: Users must have traded on Uniswap v3 with specific pairs and volumes, and must trade equivalent volumes on PancakeSwap v3.
• Reimbursement Process: Check eligibility, execute new trades, and submit a claim form.
• Market Strategy: PancakeSwap aims to attract Uniswap users by reimbursing interface fees, challenging Uniswap's recent fee increase.

This bold move by PancakeSwap underscores the competitive nature of the decentralized exchange market and aims to attract users by addressing fee-related concerns.