Blockchain network symbolizing the shift towards decentralized finance.

Decoding DeFi: How Uniswap Data Reveals the Future of Finance

Rhea Morgan in Tech & Innovation December 2025 • 4 min read.

"Unlock insights into adoption, scalability, and wealth distribution across Ethereum, Polygon, Arbitrum, and Optimism."

Decentralized Finance (DeFi) is revolutionizing the traditional financial system, enabling direct transactions without the need for intermediaries. This shift has created a wealth of open financial data, offering unprecedented insights into market dynamics and user behavior.

As the DeFi ecosystem evolves, Layer 2 (L2) solutions are emerging as a key component, designed to enhance scalability and efficiency. These solutions, built on top of Layer 1 (L1) networks like Ethereum, promise faster transaction speeds and reduced costs. However, the true impact of L2 solutions remains underexplored, largely due to the lack of comprehensive data and analytical tools.

Our study addresses this gap by analyzing over 50 million transactions from Uniswap, a leading decentralized exchange, across both L1 and L2 networks. By creating a set of daily indices from blockchain data on Ethereum, Optimism, Arbitrum, and Polygon, we provide valuable insights into DeFi adoption, scalability, decentralization, and wealth distribution. This dataset is paired with an open-source Python framework to calculate decentralization indices, making it an invaluable asset for advanced machine learning research.

The Rise of DeFi and Layer 2 Solutions: What's Driving the Change?

Blockchain network symbolizing the shift towards decentralized finance.

DeFi's appeal has surged in recent years, with the Total Value Locked (TVL) in DeFi protocols reaching an estimated $163 billion USD by January 1, 2022. Ethereum, with its robust infrastructure, commands a substantial share, accounting for 56% of the TVL. Other blockchain networks contend for the remaining market share. Central to this growth is the concept of smart contracts, programmable software applications that automate financial transactions.

However, the "blockchain trilemma" underscores the inherent trade-offs between decentralization, security, and scalability. Ethereum, for example, prioritizes security and decentralization but faces scalability challenges, with transaction processing capacity typically ranging from 15 to 30 transactions per second. This limitation often results in elevated gas fees, especially during network congestion, impacting inclusion, equality, and democratization.

Decentralization: Reducing reliance on central authorities, promoting a more distributed and democratic financial system.
Security: Ensuring the protection of the network and data integrity, safeguarding against fraud and malicious attacks.
Scalability: Reflecting the system's capacity to handle increasing transaction volumes efficiently, enabling wider adoption and use.

Layer 2 blockchains have emerged to address these challenges, promising expedited transaction speeds and reduced fees compared to Layer 1 counterparts. These solutions enhance scalability and efficiency, exemplified by Polygon's capacity to process thousands of transactions per second. The availability of L2 blockchains as a more cost-effective and efficient network alternative may drive users to migrate their activities to L2 environments.

Future Directions: The Path Forward for DeFi

Our research provides a foundation for understanding the evolving dynamics of DeFi. Future studies can expand the dataset with additional network attributes, develop advanced blockchain transaction indices, and integrate diverse networks using federated learning approaches. Interdisciplinary collaboration is essential to delve further into the complex nature of DeFi and blockchain technologies, fostering innovation and improvements in security, scalability, and decentralization.

About this Article -

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This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2312.0266,

Title: A Dataset Of Uniswap Daily Transaction Indices By Network

Subject: econ.gn cs.ce cs.cr cs.cy q-fin.ec stat.ap

Authors: Nir Chemaya, Lin William Cong, Emma Jorgensen, Dingyue Liu, Luyao Zhang

Published: 05-12-2023

Everything You Need To Know

What advantages do Layer 2 solutions like Polygon, Arbitrum, and Optimism offer over Layer 1 networks such as Ethereum in the context of Decentralized Finance?

Layer 2 solutions, such as Polygon, Arbitrum, and Optimism, offer enhanced scalability and efficiency compared to Layer 1 networks like Ethereum. These solutions promise faster transaction speeds and reduced costs. For example, Polygon can process thousands of transactions per second, addressing the scalability challenges faced by Ethereum, which typically handles 15 to 30 transactions per second. This increased efficiency can drive users to migrate their activities to Layer 2 environments, making DeFi more accessible and user-friendly.

How does analyzing Uniswap data across different blockchain networks provide insights into the broader DeFi ecosystem?

Analyzing Uniswap data across Ethereum, Optimism, Arbitrum, and Polygon offers valuable insights into DeFi adoption, scalability, decentralization, and wealth distribution. Uniswap is a leading decentralized exchange, and by examining transaction data on both Layer 1 and Layer 2 networks, it's possible to gauge how users are interacting with DeFi, assess the effectiveness of Layer 2 solutions in improving transaction speeds and costs, and understand the distribution of assets within the DeFi space. This data can inform advanced machine learning research and help shape the future of DeFi.

What is the blockchain trilemma, and how do Layer 2 solutions attempt to address it?

The blockchain trilemma refers to the inherent trade-offs between decentralization, security, and scalability. Blockchains often struggle to achieve all three simultaneously. Ethereum, for example, prioritizes security and decentralization but faces scalability challenges. Layer 2 solutions attempt to address this trilemma by enhancing scalability without compromising on the security and decentralization of the underlying Layer 1 network. By processing transactions off-chain and then anchoring them to the main chain, Layer 2 solutions like Polygon and Arbitrum offer faster and cheaper transactions while still benefiting from the security of Ethereum.

What role do smart contracts play in the growth and functionality of Decentralized Finance (DeFi)?

Smart contracts are central to the growth and functionality of DeFi. They are programmable software applications that automate financial transactions, enabling direct transactions without intermediaries. Smart contracts facilitate various DeFi activities such as lending, borrowing, trading, and yield farming. The Total Value Locked (TVL) in DeFi protocols, which reached an estimated $163 billion USD by January 1, 2022, demonstrates the significant impact of smart contracts on the DeFi ecosystem. They create trustless and transparent systems that are revolutionizing traditional finance.

In what ways can future research and interdisciplinary collaboration contribute to the advancement of DeFi and blockchain technologies?

Future research can expand the dataset with additional network attributes, develop advanced blockchain transaction indices, and integrate diverse networks using federated learning approaches. Interdisciplinary collaboration is essential to delve further into the complex nature of DeFi and blockchain technologies, fostering innovation and improvements in security, scalability, and decentralization. Further studies should explore how to enhance security measures, improve scalability to handle increasing transaction volumes, and promote greater decentralization to reduce reliance on central authorities.