Introduction to Unichain: Defragmenting DeFi on Ethereum (Report)

As a fast and low-cost L2 built on the OP Stack, Unichain provides a suitable platform for building and deploying capital-efficient DeFi applications — such as decentralized exchanges (DEXes), asset tokenization platforms, prediction markets and open lending protocols.

Key Objectives:

• Understanding Unichain’s Technical Innovations: Analyze its upcoming decentralized validation network and cross-chain capabilities, cost efficiency, and fast transaction speeds, positioning it as a scalable DeFi solution.
• Assessing Market Positioning: Compare Unichain against existing L2 solutions, highlighting its advantages in decentralization, liquidity aggregation, and adoption within the Ethereum and Optimism Superchain.
• Evaluating Adoption Trajectory: Track Unichain’s early adoption metrics, including user activity, ecosystem growth, developer engagement, and potential for long-term impact in DeFi and cross-chain liquidity.

Key Takeaways:

As a Layer 2 network designed to solve Ethereum's liquidity fragmentation problem, Unichain takes on a significant and as-yet unsolved challenge.

In this report, we find that Unichain competes favorably with existing L2 offerings in terms of block time, transaction costs, throughput and interoperability plans. But as a relatively new player in a hotly contested Ethereum scaling space, technical edges can quickly diminish as the competition evolves.

When it comes to adoption, Unichain is on track to equal or exceed the growth of even the most successful L2s. Backed by Uniswap Labs and with over 100 new and established crypto projects already integrated with Unichain, it is well on its way to becoming a major force in the Ethereum Layer 2 ecosystem.

Its sustained success will primarily depend on its ability to attract liquidity and users, maintain low fees during periods of high demand and continue to push the envelope in terms of decentralization, cross-chain interoperability and innovation.

Introduction

However, as the chain gained popularity, congestion resulted in rising fees. To address the high competition for block space Ethereum developed the rollup-centric roadmap, allowing L2s to flourish.

As novel use cases continued to push the limits of Ethereum, builders began looking for ways to offload computation and transactions to Layer 2 solutions, leveraging rollups and sidechains to enhance scalability while maintaining security and decentralization.

These limitations drove the rise of Layer 2 (L2) solutions. Optimistic and ZK rollups reduce costs by executing transactions off the Ethereum main chain while inheriting Ethereum’s security.

However, early Layer 2s introduced a new problem — liquidity fragmentation. Since each L2 operates as a separate execution environment, assets deployed on each chain can become siloed — leading to reduced capital efficiency, price discrepancies, and user experience challenges.

Purpose of the Report:

In this report, we examine Unichain’s competitive edge in DeFi, cross-chain liquidity, and Ethereum scaling — highlighting its advantages, challenges and potential.

We will examine Unichain’s innovations, including its cost efficiency, decentralization, transaction speed, and interoperability, while also exploring the challenges it may face.

Technical Innovations

Unichain introduces an array of technical innovations that aim to position it as the most suitable L2 for DeFi use cases.

Some of its most significant technical aspects include:

Low Cost & Decentralized by Design:

Unichain is the first L2 to launch as a Stage 1 rollup, meaning it started with a fully functional fraud-proof system. This ensures a higher degree of decentralization compared to most L2s.Unichain is unique in its design with its validation network, allowing full nodes to help with block verification.

Unichain’s transaction costs are up to 95% lower than Ethereum L1, making on-chain trading more accessible. ​By leveraging rollup technology and implementing faster block processing times, Unichain aims to offer fees equal to or lower than competing Layer 2 solutions.

Faster, More Efficient Markets:

Unichain launched with 1-second block times — a significant improvement over Ethereum’s 12-second blocks and even many other L2s’ 2-3-second blocks.

Future upgrades aim to reduce latency further with 200-ms sub-blocks, enabling real-time trading and improving the user experience. This upgrade will make for more efficient markets by reducing slippage risk and improving capital utilization for participants.

​In collaboration with Flashbots, Uniswap Labs is developing a Trusted Execution Environment (TEE) for block building to reduce negative MEV externalities and improve transparency. This enhancement aims to ensure near-instant execution and minimal slippage.This will further help to reduce fee burden by reducing the number of failed transactions.

Multi-Chain Swapping:

Unichain is built on the OP stack and is part of the Optimism Superchain. Unichain has publicly committed to being part of the Superchain Interoperability Standard, which will enable trustless communication with other OP Stack chains.

Once complete, low latency cross-chain message passing between Superchain chains will be possible, reducing the need for manual bridging.

Uniswap Labs spearheaded the development of ERC-7683 standard, which is designed to standardize cross-chain intents, enabling seamless interactions across Ethereum's mainnet, Layer 2 (L2) networks, and sidechains.

For developers, Unichain abstracts away the complexity of cross-chain infrastructure, enabling them to build dApps that scale across the Superchain with minimal overhead. Soon, they will no longer need to manage custom bridges, relayers, or fragmented liquidity pools.

Market Positioning

Designed to be a liquidity hub for the Superchain, Unichain aims to evolve into the best place to access liquidity throughout the DeFi ecosystem.

It’s also positioned as a Layer 2 built for capital-efficient DeFi applications. As such, its target audience is primarily liquidity providers, on-chain traders, protocol developers and the existing Ethereum & Superchain community.

Further, Unichain’s value proposition extends beyond the crypto-native audience. As DeFi continues to mature, traditional finance (TradFi) institutions, market makers, and asset managers are increasingly exploring blockchain-based infrastructure for more transparent, efficient, and programmable financial products.

Unichain's Unique Value Proposition:

Unichain is powered by Uniswap Labs, the company behind one of the leading DEXes in crypto.As we previously mentioned, it makes decentralized markets cheap and fast thanks to its low block times and minimal fees — making it ideal for trading.

Its primary UVP is its cross-chain liquidity ambitions, allowing developers to build and users to access liquidity on multiple chains from a single chain. Being open-source, it encourages community collaboration and innovation, fostering a diverse and robust ecosystem by allowing other platforms to adopt its novel technologies.

Comparison with Other L2s:

As we’ll cover in more detail shortly, Unichain boasts several technical advantages over existing L2s.

For one, it’s more decentralized than most other L2s, being the first to launch with a functional fraud-proof system. Unichain was the first L2 to launch as a Stage 1 rollup, immediately placing it among one of the most developed L2

It also boasts a lower block time than almost all other L2s with a high gas limit per block, providing enough throughput for both data-heavy and high-frequency applications.

Based on our calculations (at 100k-200k gas per transaction), the platform is capable of processing between 150-300 transactions per second (tps), putting it at the top of prominent L2s.

* calculated as gas limit per block / 100k gas

Per data from Token Terminal [1], Unichain currently has ~502k daily active users (DAU). This is now higher than most of its competitors, despite being a much newer entrant to the L2 space.

Comparing Unichain to other L2s at 80 days post-launch, we find that it is by far the fastest-growing by daily active users.

Ethereum Ecosystem Impact:

By offloading transactions from the Layer 1, Unichain helps to reduce congestion and cut costs for existing users and developers.

The platform also plans to improve interoperability within the Ethereum L2 space via its connectivity with other chains within the Optimism Superchain ecosystem and ERC-7683 capabilities.

With hundreds of projects now integrating with Unichain, the potential impact is substantial. This will be further compounded if Unichain is able to attract novel protocols and liquidity to the platform.

Since the platform’s cross-chain capabilities are currently in development, it has had limited impact on tackling the liquidity fragmentation challenge.

Given that many of the most popular DeFi protocols and infrastructure providers are now building on the platform, the full fruits of their labor should be gradually revealed as further protocols launch and Unichain’s interoperability capabilities improve.

Adoption Trajectory

Since the launch of its mainnet on February 11, 2025, Unichain has displayed consistent growth across a variety of important metrics — despite the recently poor prevailing market conditions.

This bodes well for its future trajectory.

Initial Adoption Metrics:

According to DeFiLlama's tracker, the platform saw its DeFi total value locked (TVL) swell to $564 million after 80 days post-launch.

Around 80% of this TVL is attributed to Uniswap — the number one protocol on the chain by TVL. The Stargate Finance bridge solution comes in at second place with $107 million in TVL, while open lending protocol Venus comes in distant third place with $3.4 million in TVL.

Per data from Token Terminal, the L2 has now recorded more than 6 million monthly active wallets in less than three months since launch — equivalent to ~80% of wallet addresses created on the chain.

Overall, Unichain now processes between 500,000 and 1M transactions per day.

Unichain Growth:

Unichain has already garnered significant support among popular DeFi platforms.

More than a dozen protocols are already live on the chain, three of which have a TVL in excess of $1 million. Currently, live protocols include Venus, the Stargate V2 cross-chain bridge and several DEXes — including Uniswap, DyorSwap and UCS Finance.

Several key partners have already integrated Unichain, including:

• Circle: Launched developer tools and native USDC on the chain
• Coinbase: Supports deposits/withdrawals for USDC on Unichain
• Morpho: Deployed its on-chain lending platform on Unichain
• Euler Finance: Deployed its contracts on the platform

Pyth's oracle solution now supports Unichain, while the Wormhole bridge now allows transfers between Unichain and 35+ other networks.

In total, over 100 leading apps and infrastructure providers have committed to supporting the L2.

Developer Adoption:

As a chain looking to establish itself as the home for cutting-edge DeFi applications, developer adoption is an important metric to gauge success.

To assist with this, Uniswap Foundation provides grants and support to help developers get started.

Competitive Analysis

Unichain operates in a developed space with several well-established players that are already carving out their market positions.

Before we examine how it stacks up against the L2 competition, here’s how Unichain compares with Ethereum.

Cost Efficiency:

Cost efficiency is critical for user adoption, particularly for DeFi applications, where users tend to choose platforms with the lowest fees.

Unichain, like most L2s, offers substantially reduced transaction fees compared to the underlying Layer 1 — Ethereum.

Direct comparisons between different L2s can be challenging, considering they vary by transaction load and use case.

Speed:

Speed, measured by block times, directly impacts user experience, especially for time-sensitive transactions like high-frequency trading and arbitrage.

All popular Layer 2s feature dramatically improved block times, enabling faster transaction confirmations. Currently, Arbitrum is leading the L2 landscape by block time — at 0.25 seconds whereas Optimism is on the slower side at 2 seconds. Polygon zkEVM is slower still — with an average block time north of 3.3 seconds [7].

Unichain is faster than most in this regard and plans to lead the market with an upcoming upgrade that slashes block times by 80%.

For comparison, Ethereum’s average block time currently sits at ~12 seconds [8].

As we see below, Unichain tops most L2s by block time — currently bested only by Arbitrum.

Cross-Chain Interoperability:

Cross-chain compatibility is essential for moving assets and data without barriers across blockchains.

L2s with this capability help to address liquidity fragmentation by moving away from the siloed approach taken by most L1s. However, not all L2s are equal in this regard.

Thanks to its ERC-7683 capabilities, simplified cross-chain trading is also enabled [9].

Unichain’s cross-chain capabilities are further enhanced by the integration of various bridge providers, including Wormhole and LayerZero.

Most other L2s take a different approach, primarily relying on third-party bridges as a conduit between networks.

Below is a list of the top 5 largest L2s by TVL that have committed to joining the Superchain.

Sentiment Analysis & Press Coverage

It’s no overstatement to say that Unichain received significant coverage following its launch. While press coverage was largely positive, the response on social media was mixed.

Community Reaction:

The Ethereum community has mostly positive feelings about Unichain’s mainnet launch. Enthusiasts praise Uniswap’s Layer 2 for its one-second block times and 95% lower gas fees, seeing it as a potential game-changer for DeFi.

Uniswap Founder Hayden Adams highlighted Unichain's goal of frictionless cross-chain DeFi, saying, "We’re entering a cross-chain world. How do we make that feel cohesive to users?"

Other prominent figures, including Aave Founder Stani Kulechov and Polygon Co-Founder Sandeep Nailwal, praised the platform for its role in tackling the cross-chain liquidity problem.

In general, positive posts typically emphasize the platform’s technical merits, whereas critical views focus on governance concerns surrounding the UNI tokens, with some users questioning Uniswap Lab's decision-making process and community engagement.

Media Coverage:

Numerous crypto news outlets highlighted Unichain’s ambitions both pre- and post-launch. Cointelegraph pegged its potential revenue at $500 million annually for Uniswap, whereas Crypto News Flash praised the launch, saying, “Unichain presents a solution to delayed transactions and skyrocketing fees.”

Overall, practically every major crypto news outlet covered the launch, though further coverage has been limited besides integration updates.

Future Outlook

In development since 2024, Unichain is still in its nascent stages of adoption and it remains to be seen whether it will become the de-facto L2 for DeFi.

That said, the development roadmap for the project lays out an array of upgrades that could strengthen its positioning, helping to attract users, developers and existing protocols to the chain.

Chief among these is the full implementation of 200ms sub-blocks, TEE-based block building and 200ms sub-blocks via Flashblocks. Together, these will enhance Unichain’s speed, efficiency and transaction fairness.

Besides this, further potential upgrades including scheduled transactions, encrypted mempool and a TEE coprocessor for private and verifiable computation would help Unichain stand out among stiff competition.

Attracting a significant user base and liquidity from existing siloed networks will be Unichain’s primary challenge, as is ensuring the network's security and integrity, especially with new features like permissionless fault proofs.

Despite this, there are numerous opportunities for further growth and attracting new users to the sector.

This includes tapping Uniswap Lab's extensive list of collaborators for novel protocol development and the Uniswap Foundation’s Unichain Growth Reserve to attract more developers and novel projects.

Given the range of players involved, it appears reasonable to assume the L2 is capable of attracting protocols and activity to the network.

Conclusion

Since its launch on February 11, 2025, Unichain has been met with a mix of enthusiasm and muted curiosity from the Ethereum community.

By introducing key innovations like decentralized fault proofs, plans for fluid cross-chain communication, and transparent block building, it hopes to pave the way for a more inclusive, less extractive and ultimately more capital-efficient DeFi ecosystem.

Backed by Uniswap Labs, a key player in DeFi, Unichain is well-positioned to tackle the liquidity fragmentation

By supporting fast, capital-efficient DeFi protocols and new financial primitives, it has all the makings necessary to attract users both from within the existing Ethereum and L2 community, as well as from traditional finance spheres.

As the market moves to maximize efficiency and participation, Unichain stands out as a promising platform for both builders and users.

References

Further Reading

• Unichain.org
• Unichain Technical Information
• Unichain on X
• Flashbots x Uniswap Block Builder Collaboration: Read here
• Uniswap Foundation Revenue Distribution Plan: Read here
• Chainspect Block Time Comparisons: View Dashboard
• Uniswap Interface & Wallet (swapping integration with Unichain):
• Uniswap Web App
• Uniswap Wallet
• Optimism Superchain Native Interoperability: Read here
• ERC-7683 Specification: Read here