A surge in participation in decentralized finance and decentralized exchanges has increased competition among projects especially to improve liquidity offerings. Uniswap Labs released an overview of the upcoming Uniswap Protocol v3. According to a release shared with AMBCrypto, this new feature aims to “increase capital efficiency and trade execution quality.” The new protocol is scheduled to launch on the Ethereum mainnet on 5 May, 2021.
In the previous version, liquidity providers would keep capital as a reserve for an infinite range of prices; however, Uniswap v3 includes “concentrated liquidity” that allows individual liquidity providers control over price ranges their capital is allocated to. Thus liquidity providers can provide liquidity with “up to 4000x capital efficiency” relative to v2.
Other features such as multiple fee tiers and advanced oracles are said to be “easier and cheaper” to integrate.
Addressing the launch, Hayden Adams, founder of Uniswap Labs said that the protocol serves as a “critical infrastructure” for decentralized finance. He added:
Uniswap v3 now paves the way for automated market makers to outcompete both stablecoin-focused and traditional exchanges on trade execution quality.
Recently, analysts at Intotheblock stated:
In just 78 days of 2021, the protocol did $73.1b in traded volume and over $219m in fees.
As well, the Total Value Locked reached a new ATH of $5.23b pic.twitter.com/yeklzbFt8V
— IntoTheBlock (@intotheblock) March 20, 2021
Across the DeFi sector Curve, YieldSpace, Balancer, and DODO among other projects have been attempting to improve providing liquidity in decentralized exchanges. While Curve managed to have stablecoin-to-stablecoin transfers, Balancer, a protocol for programmable liquidity, recently introduced a key feature for its V2 protocol that maximizes liquidity providers’ returns.
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