With the date set for May 2021, version 3 of the decentralized exchange platform Uniswap is among the most exciting projects in the cryptocurrency space.
Uniswap creator Hayden Adams claims there is much more in the update. Adams shared the DEX's new equation for calculating efficiency from Twitter and said:
“I don't think the insane efficiency of Uniswap v3 has emerged yet. In the past 3 months (as of January 8), the price of ETH / BTC has changed between 0.0295 and 0.0454. When added to the formula, we see that it is 9.8 times more efficient than v2. "
Comparing the latter with the upcoming version of Uniswap, Adams highlighted other important advantages, such as a reduction in the amount of capital required to provide liquidity. Liquidity providers (LP) will be able to participate in a specified range for a trading pair to charge "the same amount of permanent loss" trading fees. Adams added the following example:
“Uniswap v2 WBTC / ETH pair has $ 318 million. Instead, if WBTC / ETH LPs are provided in the range of 0.0295 and 0.0454 in v3, they can create the same amount of liquidity and bear the same amount of temporary losses with only $ 318 / 9.8 = 32 million USD. ”
🚨Uniswap v3 Will Be More Efficient
Researcher Will Sheehan dived deep into Uniswap v3 in a post titled "The Dex to Rule Them Them All." Claiming that this update will "change" the dynamics in active and passive LP, the article said there would be a better balance between all users.
According to Sheehan, Uniswap's steps are a credible attempt to become a decentralized trading hub to rule them all. Uniswap offers an option for professional market makers as well as lazy LPs, trying to link both sides and force them to play under the same set of rules. As a result, active producers get massive fee cuts in exchange for taking greater price / inventory risk. Passive makers still charge fees and take advantage of the increased buyer flows that will occur due to more active liquidity.
🚨Speaking on the subject, Adams said:
“Efficiency is just a tool to achieve a goal. The result of concentrated liquidity offers much better application rates and gives more desirable positions to LPs. How good will they be when V3 is released? These can be difficult to predict. But I have a good feeling about it. "
UNI is trading at $ 29.97 with a 0.8% gain on the daily chart. During the week, the governance token experienced a 14% gain on the monthly chart. With a total market value of over $ 15 billion, UNI managed to enter the top 10 , surpassing Litecoin and Chainlink.