With the launch of Futureswap V4 mainnet beta on Arbitrum L2, trading has now become 90% cheaper, where the trades are executed within 0.05 seconds.

*Image Source: Twitter (@futureswapx) *

Let’s explore Futureswap V4.

Futureswap V4 is a perpetual trading protocol that is flexible, competitive and economically secure. It protects the liquidity providers from impermanent loss and utilizes the power of concerning liquidity.

If you aren't aware of the "impermanent loss", then let me tell you that this loss occurs when the funds are in the liquidity pool and the ratio of tokens become uneven. We can calculate the impermanent loss by comparing the value of tokens in the liquidity pool with the value while simply holding them.

Coming back to the Futureswap V4, it can prove to be a building block for the Defi ecosystem by providing the highest leverages and an extraordinary trading experience. Compared to the Futureswap V1-V3, V4 has increased leverage and capital efficiency.

Futureswap V4 can harness the existing liquidity.

V4 can harness the existing liquidity in all the markets. It will allow the Futureswap to expand into far more markets than an exchange that needs incentivization of 100% of the liquidity of different markets. Note that Uniswap V3 is the first market that Futureswap will tap into for liquidity.

The exciting thing here is that Futureswap doesn’t need much liquidity compared to other exchanges. It is because the liquidity is leveraged up significantly here. So, in a nutshell, Futureswap does need its liquidity, but the amount required is really less. For instance, $1 million can facilitate the trading on a liquidity pool of $110 million with Futureswap.

Note that it aggregates the concentrated liquidity from different markets, which ultimately increases the market depth and reduces slippage.

Closing thoughts

Futureswap V1 was launched in 2020, and it has seen tremendous growth over time. V2 and V3 were established in 2021, and now, V4 is all set to be launched with improved features, including increased utilization of markets, capital efficiency and leverage.

The goal of launching V4 is to provide a completely decentralized perpetual trading experience which will be achieved by having up to 256x leverage and harnessing the existing liquidity of Uniswap pools. The launch of Futureswap V4 will indeed provide the DeFi space with greater perpetual liquidity.
The use of aggregated liquidity from different venues can effectively benefit liquidity providers and traders.