2021-03-24 16:39:52
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!
Introducing Uniswap V3:
Concentrated liquidity, giving individual LPs granular control over what price ranges their capital is allocated to. Individual positions are aggregated together into a single pool, forming one combined curve for users to trade against.
In Uniswap v3, LP’s can concentrate their capital within custom price ranges, providing greater amounts of liquidity at desired prices. In doing so, LPs construct individualized price curves that reflect their own preferences. By concentrating their liquidity, LPs can provide the same liquidity depth as v2 within specified price ranges while putting far less capital at risk.
Instead of providing equivalent liquidity depth as a v2 LPs with less capital, v3 LPs can choose to provide greater depth with the same amount of capital as their v2 counterparts. This requires taking on more price risk (”impermanent loss”) while supporting greater amounts of trading and earning higher fees.
At launch, capital efficiency gains will max out at 4000x for LPs providing liquidity within a single 0.10% price range. The v3 pool factory is technically capable of supporting ranges as granular as 0.02%, translating to a maximum 20,000x capital efficiency gains relative to v2.
Flexible Fees:
Uniswap v3 offers LPs three separate fee tiers per pair — 0.05%, 0.30%, and 1.00%. This array of options ensures that LPs tailor their margins according to expected pair volatility: LPs take on more risk in non-correlated pairs like ETH/DAI and, conversely, take on minimal risk in correlated pairs like USDC/DAI.
Uniswap v2 introduced a protocol fee switch, which allowed a flat 5 basis point (16.66% of LP fees) fee to be turned on by governance. Uniswap v3 protocol fees are far more flexible. Fees will be off by default, but can be turned on by governance on a per-pool basis and set between 10% and 25% of LP fees.
These features make Uniswap v3 the most flexible and efficient AMM ever designed:
LPs can provide liquidity with up to 4000x capital efficiency relative to Uniswap v2, earning higher returns on their capital.
Capital efficiency paves the way for low-slippage trade execution that can surpass both centralized exchanges and stablecoin-focused AMMs.
LPs can significantly increase their exposure to preferred assets and reduce their downside risk.
LPs can sell one asset for another by adding liquidity to a price range entirely above or below the market price, approximating a fee-earning limit order that executes along a smooth curve.
Multiple fee tiers , allowing LPs to be appropriately compensated for taking on varying degrees of risk.
Uniswap v3 offers significant improvements to the TWAP oracle, making it possible to calculate any recent TWAP within the past ~9 days in a single on-chain call. This is achieved by storing an array of cumulative sums instead of just one.
For a deeper technical overview on Uniswap v3.
A full-length audit from Trail of Bits
A full-length audit from ABDK
Bug Bounty Uniswap V3
Uniswap v3 Core whitepaper
Uniswap v3 Core smart contracts
The Uniswap v3 smart contracts will be deployed to the Ropsten, Rinkeby, Kovan, and Görli testnets in the coming days, giving developers time to begin experimenting with the protocol before the official launch.
A liquidity provider migration portal will be available at launch, allowing v2 LPs to seamlessly transfer their liquidity to the new protocol.
Contact
To get in touch, please email
[email protected]To get in touch, please telegram @uniswapkevin
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