At the moment, Uniswap accounts for 20% to 25% of transactions taking place on Ethereum. The dominance of this financial protocol is widely accepted among crypto traders. Uniswap protocols facilitate automated token transfers for different cryptocurrencies. Uniswap accounts for around 60% of operational volume in the DEX market, which is 15% higher than any other Ethereum based DEX. The current trade volume at Uniswap is about $60 billion per month.
Currently, Uniswap has been running on the V2 version to manage the non-custodial exchange. Some highlights of V2 have been ERC20 pairs, resilient-price oracles, flash swaps, and V1 liquidity migration portals. The V2 update went live in March of last year. Finally, the much anticipated new version V3 has been announced and would be available on both Ethereum and Optimism as soon as early May this year.
Uniswap to Become More Capital Efficient Platform
Hayden Adams, the founder of Uniswap, happily mentioned the inauguration of the new V3 version in a recent tweet. He has been getting poked by crypto traders to expedite the release of V3 for a long time. His tweet mentioned that he has also been eager to introduce the V3 to the existing protocols. The V3 iteration is more capital efficiency-centric than older versions.
Now the Liquidity providers (LPs) would be able to make markets within customized price ranges. With this upgrade, the issues like scalability and copyright protection against competitors would strengthen. The LP Capital deficiency has been one constant weakness of Uniswap that the crypto pundits have pointed out over the past years. Some DEX projects like Curve and Balancer have attempted to address this issue; however, none have been able to match the outputs provided by the V3 upgrade.
The Uniswap Zero Gas Fee Model
The V3 upgrade enables Uniswap users to put up the same amount of capital to earn more fees and have the option of switching to investment with the marginal saved capital. With the introduction of V3, the probability of slippage on Uniswap would decrease exponentially. The updated fee structure of V3 is also something that would add to the merit of Uniswap. Rather than a single shot pricing, the LPs would be able to benefit from three-tiered fees: 0.05%, 0.30%, and 1.00%.
In this manner, the thinly traded and longtail assets would become more approachable. The platform has also incorporated a war chest of $2 billion in lieu of a research grant. During the next 3.5 years, this amount would swell up to $20 billion. A $750,000 grant has already been distributed to encourage more developers like Optimism, as per Teo Leibowitz-strategy lead at Uniswap.