Uniswap has recently become one of the most popular decentralized cryptocurrency exchanges. In turn, in May it underwent an upgrade to the V3 version. On this occasion, we will tell you about the changes that have been implemented in it.
Uniswap V1 and V2
The V1 version of the popular DEX was launched in November 2018. It was intended as a segment for automated market makers who, based on smart contracts, could combine their assets and thus create an area for their exchange. In turn, the Uniswap V2 version was implemented in May 2020. Its purpose was to support the exponential growth of market participants. Shortly after, Uniswap became one of the leading projects of the DeFi market. However, it carried some burden due to the limited scalability of the Ethereum network on which it was built. This meant that as Ethereum and the decentralized finance sector grew in popularity, token exchanges within DEX became less and less viable. This problem particularly affected smaller users.
Uniswap V3 as a solution to the problems
The implementation of version V3 obviously helped lower the cost of exchanges. However, this was not the main purpose of the upgrade. It brought with it many other interesting solutions that significantly improved the usability of the exchange. One of the key ones was the concentration of liquidity. This gave providers control over the price ranges in which their capital was placed. A number of individual trades were placed on a single curve for users to trade against. Multi-level charging has also been implemented. It has the advantage of rewarding liquidity providers differently depending on the risk they take. Capital efficiency has also been increased, with 4000 times the capacity of the V2 version. This factor in turn has resulted in a significant reduction in the slippage of executed trades. Additionally, oracles in the V3 version have become cheaper and easier to integrate.
Making Uniswap more competitive
Uniswap has more than once surprised with its perfect adaptation to the market needs, as well as with the effective solution of problems arising within it. As one of the top decentralized exchanges Uniswap is well on its way to becoming the first among them. The values of the exchanges on the exchange are constantly reaching new records, which makes Uniswap one of the key projects within DeFi.
Although the V3 version has just been presented, the Uniswap Labs team announces further work to bring the exchange up to higher standards. This is to include the development of infrastructure to apply floating positions, extract liquidity, and create more complex strategies. This work will be carried out with the participation of the Uniswap community in order to achieve the best possible results that coincide with market expectations. This kind of approach also points to Uniswap as a potential future market leader in its segment.
And if you want to learn more about Uniswap, we invite you to read the article titled ” What is Uniswap (UNI)”, where we introduce the exchange and the pricing history of the UNI token.