Uniswap launched the long awaited V3 this week and excited many liquidity providers on Uniswap. This is why Dex’s are the future.
Just recently, the founder of Uniswap, Hayden Adams, posted this tweet:
DEXs are the future
Uniswap V3 has “seen more than twice the volume that V2 saw in its first month” according to Adams. YouTuber Sheldon Evans commented about this tweet in a new video saying:
“This means that decentralized exchanges are the future. There’s a lot of hype around DEXs because people are in custody of their own funds again. We all know storing crypto on an exchange is not the best idea. Of course it’s relatively safe, but it’s always safer to own your own crypto. You never know what could happen because it’s an unregulated market. If you don’t hold your own crypto, bad things can happen.”
If more regular users of crypto flock to decentralized exchanges, it will mean wonderful things for the future of cryptocurrency.
Improvements from V2
Uniswap V3 is set to make a better DEX(decentralized exchange) ecosystem than V3 by creating a more efficient system of rewarding liquidity providers and stakers.
According to an article from yahoo.com, one way Uniswap will improve is by allowing liquidity providers to vote by determining fees
“Uniswap V3 makes the LPs’ fees more flexible by introducing multi-tiered fee brackets.”
According to Uniswap.com on the V3 introduction article:
“Uniswap v3 is the most flexible and efficient AMM ever designed”
Uniswap discovered the technology called AMM (Automated Market Makers). Before automated market makers were discovered, decentralized exchanges had major liquidity issues. AMM provided incentives for people to become liquidity providers, creating a ecosystem never seen in decentralized exchanges before. Now with Uniswap V3, Uniswap aims to once again revolutionize the field of DEXs.
Another excerpt from the V3 introduction article reads,
Over time we expect increasingly sophisticated strategies to be tokenized, making it possible for LPs to participate while maintaining a passive user experience. This could include multi-positions, auto-rebalancing to concentrate around the market price, fee reinvestment, lending, and more.
If Uniswap V3 prevails, we will see more liquidity in the ecosystem creating a better user experience for everyone trading on the platform.
Uniswap v3 boasts that liquidity providers can have up to “4000 times more capital efficiency”. Meaning, they will earn more reward and have a greater incentive to stake more.
According to the V3 introduction article, greater capital efficiency “paves the way for low slippage trade execution that can surpass both centralized exchanges and stablecoin – focused AMMs.” This means great things for traders with less capital looking to get the best prices they can by creating a more fair trading ecosystem.
Final thoughts on Uniswap V3
The fact that the newly launched Uniswap V3 is already seeing twice as much volume in it’s first month is already a sign of success and makes us wonder how big decentralized exchanges will become in the future.
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Aaron is passionate about blockchain and has been an investor in cryptocurrencies for the past years. He enjoys engaging with other people in the cryptocurrency community online, particularly on Telegram, and learning from experts.