Decentralized exchanges have been growing exponentially in terms of usage and adoption over the past year so they need to keep innovating. Uniswap is currently the most popular, and its version three (v3) upgrade is highly anticipated. Here’s what to expect.
At the time of writing, there was still no official launch date for Uniswap v3, but it will not be far off, and many industry observers have estimated sometime in the second or third quarters of this year.
There has been a lot of speculation as to what will actually be under the hood on the latest version of the world’s most popular DEX, so here are some of those thoughts.
Layer 2 Scaling
Layer 2 scaling for Ethereum will no doubt be the biggest change to Uniswap. At the moment, carrying out token swaps on the DEX in its native form is painful for all but the whales, with average gas prices hovering around $11, according to bitinfocharts.com.
The specific L2 technology used is still subject to rumor, but it is likely to be zk-Rollups, which will take much of the work off the root chain, thus leading to faster and cheaper transactions. There are a number of existing options for this L2 solution, such as Optimism, which is currently being tested on DeFi protocol Synthetix. Plasma is another L2 option and that is being used on the OMG Network.
More Liquidity Mining
Nothing entices liquidity better than high yielding pools, and it is likely that Uniswap will include a couple of new ones with the launch of v3. This will have a twofold effect of rewarding UNI token holders and increasing liquidity on the platform.
When Uniswap launched with its four UNI farming ETH pools in September, liquidity surged to $3 billion. It has currently returned to those levels, according to Defipulse, after losing most of it, so it stands to reason that Uniswap will want to retain this collateral lockup rather than have it go to rival SushiSwap. New UNI farming pools would be the natural solution.
To garner greater overall adoption, platforms need to make it easier for end-users. At the moment, Uniswap is a little clunky to use with wallets needing to connect, transactions needing extra confirmations, and gas price and slippage tolerance adjustments.
A vastly improved user interface and experience will automate a lot of these things, making it easier for the end-user that isn’t technically minded. A native Uniswap wallet may also be on the cards to alleviate the need to link to third party ones.
A lot of this is just speculation at the moment, but Uniswap does need to step up in order to keep its position as the most popular DEX, so v3 definitely needs to live up to the hype.
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