Uniswap 3.0 is now live, new feature “Centralized Liquidity” helps attract traders with large capital volumes

Uniswap version 3.0 is now live, and it is widely expected that the upgrade will make automated market makers more attractive to the wealthiest cryptocurrency traders and funds.

On May 6, Uniswap version 3.0 went live, and it is widely expected that the upgrade will make automated market makers more attractive to the wealthiest cryptocurrency traders and funds.

Uniswap, which first launched on Ether out in late 2018, holds $7 billion in assets according to DeFi Pulse’s rankings. According to Uniswap’s own statistics, its v2 version has accumulated $1.6 billion in transactions in the last 24 hours.

Uniswap v3 is a big step forward for the protocol,” wrote Jump Capital’s Peter Johnson in an email. “It provides market makers with greater flexibility in how they provide liquidity in the protocol, which makes the supply of liquidity more attractive and should make trading in Uniswap more efficient for traders. Jump Capital is the venture capital arm launched by the principals behind Jump Trading, an influential high-frequency and algorithmic trading firm founded in 1999.

The Uniswap team launched a liquidity migration contract and user front-end to help liquidity providers migrate market making funds from Uniswap V2 to V3, which is also available to help liquidity providers migrate market making funds on SushiSwap.

The main innovation of this new release is “centralized liquidity”.

Centralized liquidity makes the basic functionality of the AMM more efficient for all users. A basic AMM allows market participants to deposit two tokens into any given liquidity pool. Each pool then provides a price for both tokens. This price is determined solely by the ratio of the two tokens.

When a trader buys or sells tokens from an AMM pool, they pay a small fee for each transaction. This fee is then distributed to all depositors on a pro-rata basis.

Centralized liquidity allows people to lend funds to a pool called a liquidity provider (LP) to determine the interval in which their deposits will be traded. They can deposit 100 USDC and 100 DAI, but their USDC will never fall below 0.99 DAI and will never exceed 1.01 DAI.

This is why most people at DeFi believe that the new version of Uniswap will attract more “giant whales” or massive investors.

It’s also a smart solution to the ‘temporary loss’ problem, a problem that has long plagued liquidity providers of asset management agreements. In a classic AMM, when one token in a pool of two tokens benefits too much over the other, the liquidity provider can lose money in a relatively short period of time.

Bancor and THORChain provide temporary loss insurance. However, with Uniswap v3, liquidity providers can disallow deposits to be traded to the extent that temporary losses may occur. The new version also allows depositors to define different transaction fees, which will make it more attractive to provide liquidity for tokens that are traded less frequently.

At this time, Uniswap V3 is not launching a new liquidity mining plan for this release. the Uniswap team says that liquidity mining plans can be launched through the standard governance process.

Uniswap 3.0 is now live, new feature "Centralized Liquidity" helps attract traders with large capital volumes

That’s why most people at DeFi think the new version of Uniswap will attract more ‘giant whales’ or large-scale investors.

It’s also a smart solution to the ‘temporary loss’ problem, a problem that has long plagued liquidity providers of asset management protocols. In a classic AMM, when one token in a pool of two tokens benefits too much over the other, the liquidity provider can lose money in a relatively short period of time.

Bancor and THORChain provide temporary loss insurance. However, with Uniswap v3, liquidity providers can disallow deposits to be traded to the extent that temporary losses may occur. The new version also allows depositors to define different transaction fees, which will make it more attractive to provide liquidity for tokens that are traded less frequently.

At this time, Uniswap V3 is not launching a new liquidity mining plan for this release. the Uniswap team says that liquidity mining plans can be launched through the standard governance process.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/uniswap-3-0-is-now-live-new-feature-centralized-liquidity-helps-attract-traders-with-large-capital-volumes/
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