The launch of Uniswap V3 can be described as a revolutionary advancement in the DeFi field, and its capital efficiency has increased by an unprecedented 4,000 times! This news will undoubtedly set off a new financial wave. Let’s delve into the new features of Uniswap V3 and its impact on the entire cryptocurrency world.

The launch of Uniswap V3 means that the DeFi industry will usher in a huge change. As the leader of decentralized trading platforms, Uniswap has been committed to improving user experience and fund utilization. This upgrade will bring users a more efficient and flexible trading experience, while also bringing more opportunities and potential to project parties and liquidity providers.

In Uniswap V3, the improvement of capital efficiency is the most eye-catching aspect. By introducing the market maker model common in centralized exchanges, Uniswap V3 can maximize the utilization of funds and allow more funds to participate in liquidity mining, thereby providing users with better trading depth and lower slippage. . This brand-new mechanism not only improves user trading experience, but also creates more revenue opportunities for liquidity providers.

In addition to improving capital efficiency, Uniswap V3 also introduces more innovative features, such as limit orders and stop-profit and stop-loss functions that are common in centralized exchanges, allowing users to conduct transactions and risk management more flexibly. The introduction of these functions will further enhance Uniswap’s competitiveness in the DeFi field and attract more users and projects to join.

In addition, Uniswap V3 also adopts a dynamic rate model to adjust transaction rates according to the utilization rate of the liquidity pool, thereby maintaining the balance of the liquidity pool and avoiding excessive runs and price distortion. This dynamic adjustment mechanism will make Uniswap V3 more stable and sustainable, providing users with a more secure and reliable trading environment.

Overall, the launch of Uniswap V3 marks a new milestone for the DeFi industry, bringing more opportunities and possibilities to users and project parties. As the DeFi industry continues to develop and grow, it is believed that Uniswap V3 will play an increasingly important role in the future financial world, promoting change and innovation in the entire financial system. Let us wait and see and witness the continued development of this financial revolution!

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

Uniswap is currently the decentralized exchange (DEX) with the largest trading volume. According to CoinGecko data, Uniswap’s trading volume reached US$1.25 billion in the past 24 hours. In addition, Uniswap’s total locked value (TVL) exceeded US$4 billion, providing DeFi with Sixth in application.

Yesterday (23rd), Uniswap officially released the V3 version of the white paper. According to the official website statement, Uniswap
V3 will officially debut on the Ethereum mainnet on May 5; it has been rumored that Uniswap will introduce Layer 2, which was also confirmed in the statement. Uniswap
V3 will be built on Optimism and is expected to be released in mid-May.

Uniswap pointed out in an article on its official website that the biggest change in the V3 version compared to the previous version is the introduction of concentrated liquidity (Concentrated Liquidity) and multi-level fee rates (Multiple
Fee Tiers).

Centralized liquidity allows liquidity providers (Liquidity
Provider, LP) can allocate funds within certain price ranges, provide liquidity, and obtain higher rewards; while the multi-level handling rate provides three-level rates for LPs, and higher rates can be set for those with higher risks. Rate.

The article reads: “Compared with Uniswap V2, the Uniswap V3 version’s LP capital efficiency can be increased by up to 4,000 times.”

 Four major updates

01 Concentrated Liquidity

Uniswap
The biggest update of V3 is the addition of granularity control to xy=k of the original automatic market maker algorithm (AMM). LP can provide liquidity and concentrate funds in the most frequently traded range to obtain maximum capital efficiency.

For example, users can mortgage most of their funds in the ETH/DAI trading pool and set the price within the trading range of US$1,000 to US$2,000. Since most of the trading volume of ETH/DAI is between the two, therefore , users maximize the efficiency of their funds.

In addition, this can also solve another problem: impermanent loss. By concentrating funds in a certain range, users will automatically stop losses as long as the transaction price deviates from the setting, so there is no need to consider losses at extreme prices.

02 Multiple Fee Tiers

Multi-tiered fee rates are another major update. Uniswap V3 provides three fee levels for LP, namely 0.05%, 0.30%, and 1.00%.

The Uniswap team believes that higher fees can be set on riskier trading pairs, such as the ETH/DAI trading pair; and lower fees can be set on less risky trading pairs, such as the USDC/DAI trading pair. Rate. It can even be set up to 1% on riskier trading pairs.

03 Partial range limit orders (Range Orders)

The above two functions are more aimed at LPs, while partial range limit orders are mainly aimed at traders. This function is similar to the limit order of a centralized exchange.
Order). A limit order allows users to buy or sell an asset at a certain price.

The partial range limit order allows users to set a certain price range to trade an asset. If the price triggers the transaction, the user's asset will gradually be traded and exchanged for another asset; in addition, it can also be reversed. Operation, as long as this price is exceeded, the asset will all be traded into another asset.

04 Reduce oracle handling fees

In the Uniswap V2 version, Uniswap introduced the time weighted average price oracle (Time Weighted Average
Price, TWAP) provides data to third parties and is currently integrated into dozens of projects, including Compound and Reflexer.

This update to the oracle allows third parties to call TWAP data in the past nine days through a single handling fee (Gas). Compared with the V2 version, the V3 version can reduce the consumption of Gas handling fees by 50%.

Not only these four functions, this update of Uniswap also brings many doubts, including the transformation of LP tokens into NFTs (non-fungible tokens). This is because each LP token represents the provision of liquidity in different price ranges, so each LP token is different, which causes the issue of composability of LP tokens in the future.

In addition, as stated on the official website, in order to solve the transaction fee problem, Uniswap will have a second-layer solution, which also creates the integration problem of how to integrate Layer 1 and Layer liquidity.

However, in order to prevent SushiSwap’s vampire attacks from happening again, the core code of Uniswap’s V3 version will be protected by the Business Source License.
Although copyright protection can still give third parties direct use rights, within two years, commercial applications cannot directly use the V3 version of the program code.