Uniswap, the leading decentralized digital assets exchange, has today, on May 5, 2021, unveiled its third version dubbed ‘Uniswap V3’. Notably, the firm introduced Uniswap V2 in May 2020, which, ostensibly, triggered a major defi bull market that in turn sparked the ongoing cryptocurrency bull market.
Uniswap was launched at the tail end of 2018, whereby it was built on top of the Ethereum blockchain. Over the years, it has grown to the leading automated market maker (AMM) by total value locked.
According to metrics provided by Defi Pulse, the total value locked in the entire decentralized exchanges is approximately $25.01 billion. Notably, Uniswap has over $7.31 billion locked in its ecosystem, thus having dominance of around 29.25%. According to the company, its second version has facilitated over $135 billion in traded volume. Thereby making it one of the largest digital asset spot exchanges in the world.
The firm aims to evolve simultaneously with the Ethereum ecosystem as it rolls out Eth 2.0. “Today, we are excited to present an overview of Uniswap v3. We are targeting an L1 Ethereum mainnet launch on May 5, with an L2 deployment on Optimism set to follow shortly after,” the firm noted in a post on its official website.
The question is whether the Uniswap V3 will be the needed catalyst to trigger another major bull rally. It will be an interesting space to watch as more institutional investors proliferate into the Defi market and integrate the Uniswap capabilities.
Key Features of Uniswap V3
Uniswap V3 introduces various aspects that were not there in the prior version. One, it will offer concentrated liquidity that will provide individual liquidity providers control over what price ranges their capital is allocated to.
The other notable feature with Uniswap V3 is the multiple fee tiers that enable liquidity providers to earn variously depending on the level of risks. These two features make the latest version the most flexible and efficient AMM ever designed.
Other notable features include enhancing liquidity providers’ returns in relation to Uniswap V2.
Notably, liquidity providers will now have over 4000 times capital efficiency in relation to Uniswap V2. Hereby enabling low slippage trade executions. With the latest update, liquidity providers can now select their preferred digital assets to be exposed to, hence freely manage their downside risks.
Uniswap’s native token that is used for governance issues has significantly benefited from the DEX’s success. According to market data provided by Binance-backed Coinmarketcap, UNI token was trading around $43.57 at the time of reporting, up 4.59% in the past 24-hours. Ranked position 9 by market capitalization, the asset has a market cap of approximately $22.8 billion with 523,384,244 UNI in circulating supply, around 52%.