Uniswap V3 is here, but was it worth the wait? March 17–24


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Uniswap V3 was publicly announced yesterday and I didn’t actually get an opportunity to jot down about it, so I needed to dedicate this article to a evaluate of V3 and the AMM area typically.

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My preliminary response to Uniswap V3 in a single, brutally sincere phrase, was “meh.” Nevertheless it obtained higher once I learn additional into it, so let’s unpack what’s taking place right here.

Uniswap V3 is a strong improve and it’s clear that loads of work went into it. Nevertheless it under-delivers in comparison with the overvalued image most of us had of the brand new Uniswap. Individuals anticipated Hayden Adams to silence everybody and roll-out this superb impermanent loss-protected and tremendous environment friendly AMM that would go away Uniswap towering over everybody else.

As an alternative, V3 really worsens impermanent loss, relying in your private place and market motion.

The important thing innovation of V3, and the mechanism that worsens impermanent loss, is the idea of concentrated liquidity. Which means liquidity suppliers can now select the value ranges by which they commit liquidity, as a substitute of protecting all the zero-to-infinity vary. To clarify the mechanism, it’s essential to first perceive how AMMs work, in quite simple phrases.