The developers of the Uniswap decentralized exchange have unveiled a new version of the Uniswap v3 protocol, which will launch on May 5 on Ethereum, and then integrated with the second level solution Optimism.
According to a developer blog post, the goal of the new protocol version is to make the application “the most flexible and efficient automated market maker ever created.” The developers plan to launch Uniswap v3 on the Ethereum mainnet on May 5, and are also considering integration with Optimism’s second-tier solution aimed at increasing network throughput.
According to the developers, the new version of the protocol will increase capital efficiency up to 4,000 times compared to the current version of the application. A key change outlined in the project’s White Paper is “concentrated liquidity,” which allows liquidity providers to set minimum and maximum prices for their stake in any given pool.
“We are introducing Uniswap v3, a new automated market maker that gives liquidity providers greater control over the price ranges in which their capital is used, with limited impact on liquidity fragmentation and gas inefficiency,” the developers say.
The new version of the protocol will also allow creating different pools with different commissions. So far, trades across all Uniswap pools have had a 0.03% commission. The white paper of the project states:
“While historically this fee has worked well enough for many tokens, it is probably too high for some pools (like pools between two stablecoins) and probably too low for others (like pools that include very volatile or rarely traded tokens) “.
A key change for Uniswap’s composability could be the elimination of its own ERC-20 tokens representing liquidity provider positions. “Changes in Uniswap v3 are causing this problem by making fungible liquidity tokens impossible to work,” reads the White Paper.
Additional reporting will be needed to determine the impact of changes in tracking positions of liquidity providers. The developers believe that this will ultimately make the work with the protocol more flexible for users:
“We expect more elaborate strategies to be tokenized over time. This will allow liquidity providers to participate in the protocol while maintaining passive user interactions such as automatic rebalancing to focus on the market price, reinvesting commissions, lending, and more. ”
Finally, the developers describe a major licensing change for the new version of Uniswap:
“Uniswap v3 Core will be launched under the Business Source License 1.1. The license restricts commercial or production use of the Uniswap v3 source code for two years, after which the protocol will be distributed under the GPL perpetual license. We strongly believe that decentralized financial infrastructure should ultimately be free and open source software. At the same time, we believe the Uniswap community should be the first to build an ecosystem around the Uniswap v3 Core codebase. ”
With the new license, the developers want to prevent other DeFi projects from completely copying the protocol code to create their own applications. As a reminder, last fall a fork of Uniswap called SushiSwap brought liquidity from the parent platform to its own. As a result, the volume of assets blocked on Uniswap fell by 75%.
Uniswap is the sixth largest DeFi protocol with over $ 4 billion in crypto assets locked in. Last month, the Uniswap exchange was the first in the DeFi industry to reach a total trading volume of over $ 100 billion.
