Uniswap Unveils UNI-V3

By Austin Reihl | Cyberfeed | 29 Mar 2021

To the delight of users of the Uniswap (UNIdecentralized exchange (DEX), the top-dog of decentralized finance (DeFi) has unveiled an early version of the long-awaited UNI-V3 update.


The launch of the UNI-V3 mainnet officially has a scheduled launch date for May 5th of this year!


Mainnet launch scheduled for May 5th with a scalable Optimism L2 deployment set to follow soon after https://t.co/NTekDxWVA8 — Uniswap Labs (@Uniswap)


Introducing UNI-V3


In a blog post last Tuesday, the team behind the platform said it aims to make Uniswap “the most flexible and efficient [automated market maker] ever designed” with the release of UNI-V3.


With the rise of automated market makers, the popularity and user adoption seen on the DEX has grown considerably in stature since last spring with the launch of UNI-V2.


Rivals like the SushiSwap exchange, 1inch Exchange, and others have also made trading ERC-20 tokens easy for users – a huge step forward in promoting mainstream adoption of DeFi applications like the Uniswap DEX.


4000x More Capital Efficient


Arguably, one of the most significant upgrades to the Uniswap protocol with the upcoming launch of UNI-V3 focuses heavily on making the DEX as capital efficient as possible.


With concentrated-liquidity, the positions of liquidity providers (LPs) become aggregated into a single pool. LPs can supply liquidity with up to 4000x capital efficiency relative to Uniswap v2, earning higher returns on their capital.


The enhancement paves the way for low slippage trade execution while allowing yield farmers to increase their exposure to preferred assets and reduce their downside risk.


Custom Price Curves


The official blog post by the Uniswap team released last Tuesday also explained the introduction of custom price curves.


The blog post stated, “(that) in Uniswap-V3, LPs can concentrate their capital within custom price ranges, providing greater amounts of liquidity at desired prices”.


Essentially, custom price curves will mean that liquidity positions are no longer fungible and are not represented as ERC-20 tokens in the core protocol but represented by non-fungible tokens (NFTs) instead.


Other Improvements


Other improvements with the anticipated release of UNI-V3 include upgrades to price oracles, modified for an easier and cheaper integration over the previous iteration of the Uniswap protocol.


Unfortunately, there will be little relief in the high Ethereum (ETH) gas fees, with the UNI-V3 announcement blog post stating, “the gas cost of v3 swaps on Ethereum mainnet is slightly cheaper than v2.”


Final Thoughts


Following months of teasers and announcements, the team at Uniswap has finally unveiled the specifications for the much anticipated UNI-V3 upgrade – with the mainnet launch planned for May 5th of this year!


According to the team behind the Uniswap DEX, the upcoming V3 update will make Uniswap the most flexible and capital-efficient automated market maker (AMM) designed ever.


However, only time will tell if UNI-V3 truly lives up to the hype and mass anticipation we have seen so far from dedicated users and speculators alike in the ever-growing and evolving DeFi space.


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Austin Reihl
Austin Reihl

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