Upcoming Uniswap V3 to provide flexible fees and 4,000x more capital efficiency

TL;DR Breakdown

  • Uniswap V3 will be deployed on the Ethereum and Optimism network in May.
  • The next iteration is designed to allow more capital efficiency and flexible transaction fees. 

On Tuesday, the development team behind the popular decentralized exchange (DEX), Uniswap, presented an overview of the next iteration of the exchange. From the information provided, Uniswap V3 is designed to become the most flexible and efficient AMM ever launched in the decentralized finance industry. 

Among other things, the key features of the upcoming V3 include cheaper gas fees for transactions and 4,000x more capital efficiency for liquidity providers on the platform.

Uniswap V3 is launching on May

Following the blog post, the next iteration of Uniswap will be deployed on two networks, Ethereum, and Optimism, in the next two months. Firstly, Uniswap V3 will be deployed on the Ethereum blockchain on May 5, while the launch on Optimism is slated to happen later the same month. Optimism is an Ethereum Layer 2 scaling solution that allows cheaper fees by using optimistic rollups.

Hence, transactions made on Uniswap V3 through Optimism will be significantly cheaper. Even without the scaling solution, the development team noted that V3 would still enable users to process transactions on Ethereum mainnet at a slightly cheaper fee compared to the current iteration, Uniswap V2. The fact that V3 will feature concentrated liquidity and up to 4,000x more capital efficiency makes it a lot better for liquidity providers to earn higher returns. 

“Capital efficiency paves the way for low-slippage trade execution that can surpass both centralized exchanges and stablecoin-focused AMMs,” the Uniswap team wrote.

A better version of Uniswap

Although the current version of the DEX is plagued with high fees because of the congestion on Ethereum, Uniswap has unarguably grown so much to become an important part of the decentralized finance market. When the V2 was deployed back in May last year, it amassed over $135 billion in transaction volume in one year. 

With about $4 billion worth of assets currently locked on the platform, we can expect to number to surge significantly when the Ethereum and Optimism launch completes. 

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