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Version 3.0 of Uniswap, an update that will render the automated market manufacturer far more appealing to cryptocurrency investors, is now live.
The Uniswap protocol company announced version 3 in late March and has now been deployed into an Automatic Market Maker (AMM) amid an Ether crypto-bull run to all-time highs. ETH is the second-largest cryptocurrency and Ethereum’s native token, where DeFi was born and is still thriving.
Currently, the decentralized exchange, which got launched in Ethereum at the end of 2018, is the fourth-largest application for decentralized finance (DeFi), ranking as DeFi Pulse, with $7 billion of assets staked. Uniswap’s V2 accrued 1,6 billion dollars of trading in the last 24 hours, according to its statistics.
Making AMM Versatile and Practical
Peter Johnson of Jump Capital wrote via email that the Uniswap v3 is a significant step forward for the protocol. Because of the increased flexibility offered by the protocol to market makers, liquidity provision is desirable, and trading at Uniswap is better for traders. Jump Capital is the corporate arm established by the managers of Jump Trading, a major trading company formed in 1999.
Uniswap v3’s objective is to make the AMM as versatile and practical as possible. The DEX reflects three new features.
The first is concentrated liquidity. Uniswap wrote in a March press release that automated market makers have usually wanted all [liquidity providers] to share the same strategies and deposit their capital across the entire prices’ curve from 0 to endless. In doing so, the individual expectations of future price activity have not been met and concentrated liquidity benefits because traders do not need to bring as much money into action to produce results.
Uniswap also adds more fee tiers to assess their level of risk when trading volatile assets that are vulnerable to changes in prices between the beginning and the execution of a trade.
Finally, it introduces “easier and cheaper” oracles, which ensures that the price is up-to-date and reduces the chance of misinformation being burned.
They are advanced trading characteristics that won’t benefit newbies but which Uniswap says can lead to higher returns for experienced DeFi traders.
The Competition is Fierce
Uniswap is experiencing major competition from other DEXs. First, Kyber announced plans for version 3.0 of its permissionless exchange earlier this year. The release was also designed to reduce the risk of volatile asset traders.
The Binance Smart Chain (BSC) was developed to support DeFi applications, including DEXs, by Binance, an integrated centralized exchange. BSC-based PancakeSwap has also reduced Uniswap’s share of the market.
Uniswap’s clone, SushiSwap, also announced winter plans to attract more liquidity through interoperability and launch its lending platform. It means that it will lend more through other DeFi protocols.