A project funded by one of 2017's largest initial coin offerings (ICOs) is facing fierce competition from a brand-new competitor funded by a modest grant.

Bancor, which raised $150 million during the ICO craze, was founded to make it easy to trade even illiquid ethereum tokens. That's the same mission as Uniswap, which launched in November and is funded solely by a $100,000 grant from the non-profit Ethereum Foundation.

Yet, despite the fact that Bancor has been live for over a year, and that it has more resources, new data from blockchain analytics firm Blocklytics reveals the two protocols are now locked in a tight competition to programmatically facilitate ethereum trades.

Blocklytics found Uniswap first overtook Bancor in total ether trading volume on Feb. 13, when it had a daily trading volume of $541,408 – a full $196,478 more than Bancor for the day.

But Uniswap’s advantage over Bancor was not permanent.

The difference narrowed on Feb. 14 and Bancor reclaimed the lead on Feb. 15. On Feb. 17, the last day with complete data, Bancor's $571,395 in trades amounted to $137,866 more than Uniswap's, according to the firm's findings, shared exclusively with CoinDesk.

The data presents only a snapshot of how the two protocols aimed at offering market liquidity have fared in recent weeks. Still, the new competition has been enough to spur notice from market observers who feel that Uniswap may offer improvements on the Bancor model, particularly in its decision not to introduce or require the use of its own ethereum token.

Robert Leshner of Compound Finance, a protocol for collateralized lending on ethereum, told CoinDesk that he'd been impressed with Bancor's design, at least until Uniswap went live.

Leshner told CoinDesk:

The findings have imbued the Uniswap team with a new confidence in their approach as well, leading them to suggest Bancor wasn't able to build a moat around its service.

Project creator Hayden Adams says Uniswap's technology makes it easy for people who want to participate in market making to join in. "This has led to a massive growth in the liquidity pools, which allows for larger trades and a higher volume," Adams told CoinDesk.

However, Bancor emphasizes that focusing on ethereum trading misses the larger story: Bancor's ability to trade tokens across more than one public blockchain.

Nevertheless, by either metric, the research by Blocklytics shows Uniswap, a smaller, newer application has quickly become competitive in facilitating ether token trading. From the start of 2019 to now, Uniswap's trading volume is up more than 10x, according to Blocklytics.

That said, it's not exactly an apples-to-apples comparison.

Caleb Sheridan, co-founder of Blocklytics, told CoinDesk that the nature of these apps makes comparing them complicated. In short, they each trade between tokens by first trading into a third, more widely traded token.

On Bancor, a trade from REP to ZRX would trade REP for BNT and then BNT for ZRX. On Uniswap, ETH would be in the middle rather than its own token.

"We avoid counting the same volume more than once by treating each order as one trade regardless of how many trades the platform actually made to fulfill that order," Sheridan said.

Although, the data compiled by Blocklytics shows that Bancor remains ahead on several other metrics. Bancor is running 76 more ERC-20 tokens than Uniswap as of this writing.

Bancor told CoinDesk it did $3.67 million in volume from Feb. 3 to Feb. 9. The analysis from Blocklytics shows it running $2.89 million in volume over that period. (Bancor declined to provide daily volume, but Blocklytics' report does not include EOS trades.)

Additionally, much of Uniswap's recent growth can primarily be ascribed to trades for MKR, the governance token for MakerDAO's two-token system, with a healthy dose of DAI (MakerDao's stablecoin) in there as well. Bancor currently sees more individual trades and hosts more accounts than Uniswap.

From Bancor's perspective, a key value add for its automated market makers is also the fact that it aims to offer its service to more than one blockchain (today, ethereum and EOS), something Uniswap cannot do. From Uniswap's perspective, ethereum is the only blockchain it is interested in serving, so it could muddy the waters to compare Uniswap to Bancor.

Nate Hindman, a spokesperson for Bancor, told CoinDesk in an email:

However, the data opens up old questions about tokenized business and fundraising models, particularly how effective they can prove to be against those that do not require a new token.

Bancor, the largest token sale ever at the time, stirred controversy over its use of a token, BNT, drawing fire from prominent technologists, including researchers at Cornell University.

Nevertheless, it quickly saw adoption once its product went live, proving its thesis was right: people wanted an easy way to trade between any two tokens. Further controversy would arise when Bancor suffered a 2018 security breach. But it continued to see usage and growth.

Still, Bancor has had to continue to defend its use of a token. (For example, the Bancor team used a Twitter thread to defend its use of the BNT token last week.)

"In total 1.2 million transactions have been processed through BNT across 40,000 wallets, totaling $1.5 billion in conversions,” the company wrote. “Around 10 percent of BNT’s total supply is staked in automated market makers facilitating these conversions, making BNT one of the most active utility tokens in the world."

Nevertheless, by either metric, the Blocklytics research shows the smaller, newer application has quickly become competitive, perhaps opening the door for competitors to emerge on Bancor that facilitate trading by using a protocol's native token.

For now, Uniswap’s Adams told CoinDesk he’s focused on improving the usability of the service.

He wrote:

Bancor co-founder Galia Benartzi speaks at niTROn Summit 2019. (Photo by Brady Dale for CoinDesk)