Tag: V3

PancakeSwap Launches V3 with Lower Fees and Enhanced Capital Efficiency

by Blockchain News

Decentralized finance (DeFi) protocol PancakeSwap has launched version 3 of its automated market maker platform on BNB Chain and Ethereum, with the upgrade encompassing performance improvements and lower fees.

PancakeSwap is a popular DeFi platform that enables users to trade cryptocurrencies without intermediaries. It operates as an automated market maker (AMM), meaning that it relies on a smart contract to determine the price of tokens based on the ratio of supply and demand.

One of the key features of PancakeSwap V3 is enhanced capital efficiency. In the previous version of the platform, liquidity from providers (LPs) was distributed uniformly along the price curve of trading pairs. This approach was considered inefficient because assets typically trade within certain price ranges. V3 allows liquidity providers to select a custom price range to provide liquidity, allowing specific control over capital investments to higher volume trading ranges.

Moreover, PancakeSwap V3 features four new trading fee tiers ranging from 0.01% to 1%, which is a change from V2’s standard 0.25%. Every token pair can have liquidity pools for each tier. PancakeSwap expects asset pairs to be drawn to tiers where incentives for LPs and traders align. This approach is an effort to balance between traders targeting the lowest fees while still incentivizing LPs. The higher percentage trading fee tiers cater to assets that have higher impermanent loss or lower liquidity. This mechanism intends to provide more fee revenue and incentive for LPs.

PancakeSwap caters to a broad DeFi user base, accounting for over $2.5 billion of total value locked and serving over 1.5 million unique users. The platform also revealed upcoming features that are still in development, including a trading rewards program incentivizing traders with exclusive benefits, while a position manager feature aims to improve user experience when depositing tokens as liquidity.

In other news, Arbitrum (ARB) has been in the spotlight in March, with its highly-anticipated airdrop consolidating around $3.3 million from over 1,400 addresses into two controlling wallets. Arbitrum is a layer-2 scaling solution for Ethereum that aims to improve its scalability and lower its transaction fees. Its airdrop has generated significant interest from DeFi enthusiasts who are looking for new opportunities to earn rewards.

In summary, PancakeSwap V3 is a significant upgrade that aims to improve capital efficiency and lower trading fees. It also features four new trading fee tiers that cater to different types of assets and traders. With over 1.5 million unique users and more upcoming features in development, PancakeSwap is likely to remain a popular DeFi platform.

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Uniswap deploys V3 contracts to four Ethereum testnets

by Cointelegraph

Leading decentralized exchange Uniswap has taken a step closer to launching its highly anticipated “V3” iteration, announcing the successful deployment of V3’s smart contracts to all Ethereum test networks.

In an April 21 announcement, Uniswap Labs confirmed that the protocol’s V3 core and periphery smart contracts have been deployed to all major Ethereum testnets — Ropsten, Rinkeby, Kovan, and Goerli.

The testnet addresses were posted to Github, with Uniswap reminding users that the addresses are not final and will be changed as the team makes final updates to the periphery repository. Version three’s core contracts have also been deployed to GitHub.

A bug bounty was started on March 23 offering rewards of up to $500,000 for the discovery of high severity bugs in V3’s contracts. According to the official announcement, Uniswap v3 is expected to launch to mainnet on May 5.

Uniswap has taken a path of capital efficiency for its next upgrade which may complicate the passive income aspect of liquidity provision for many casual DeFi investors.

Some of the upgrades in the next iteration include multiple fee tiers which allowing liquidity providers to be compensated for taking on varying degrees of risk. There are also upgrades to the automated market maker bonding curves, which aggregate individual positions into a single pool to form one combined curve for users to trade against.

Uniswap V3 offers three separate fee tiers per pair according to expected pair volatility — 0.05%, 0.30%, and 1.00% — offering greater protection against impermanent loss to liquidity providers.

Despite the high Ethereum network fees, which are currently around $67.86 on average for a token swap on Uniswap according to Etherscan, the DEX continues to attract high trading volumes.

On April 20, Uniswap founder Hayden Adams posted that the platform had reached the milestone of $10 billion in weekly trading volume for the first time,

At the time of writing, the DEX’s native UNI token was trading 6.8% higher over the past 24 hours according to CoinGecko. UNI tokens were changing hands for a shade under $32, but down from their April 15 all-time high of $39.20.