The long-awaited official announcement for the launch of Uniswap version 3 has finally arrived. However, hopes for a huge improvement in transaction costs and speeds have been dashed.
Following a teaser posted on March 23, the team behind the world’s most popular decentralized switch, Uniswap, has finally released details on the version 3 specifications.
The start of the mainnet is planned for May 5th. Layer 2 scaling with Optimism rollups will follow.
Uniswap is currently the top gas hog in the crypto industry. According to the ETH gas station, the exchange has chewed in fees of $ 2 million in the past 30 days. The new iteration will hopefully alleviate these issues, although it cannot address the problem directly.
Uniswap v3 under the hood
The recently released specifications stated that gas prices will improve somewhat. However, the gas costs will only be fully reduced if the scaling of layer 2 is introduced at a later point in time. So in short, don’t expect a break from those painful transaction costs.
What it means is that v3 introduces what is known as “concentrated liquidity”. This gives individual liquidity providers “granular control” over the price ranges for their allocated capital. Positions are pooled into a single pool and form a combined curve that users can trade against.
“Compared to Uniswap v2, LPs can provide liquidity with up to 4000 times the capital efficiency and thus achieve higher ROI.”
It added that there will be several flexible tiers of fees for risk compensation when providing liquidity. In addition, the introduction of improved oracles in version 2 has further developed the TWAP system (Time-Weighted Average Price). However, it won’t bring the huge gas savings many have been hoping for:
“Despite these groundbreaking design improvements, the gas costs of v3 swaps in the Ethereum mainnet are a little cheaper than in v2. Transactions under the Optimism deployment are likely to be significantly cheaper! “
Little Hope from EIP-1559
According to a report by Coin Metrics on March 22nd, the problem is due to the Ethereum blocks being over 95% full. The report added that by March 2021, the blocks were 97-98% full. This means that miners prioritize the higher gas transactions as each block can only move a limited amount.
The analytics provider added that EIP-1559, slated for launch in July, is unlikely to solve this problem. This is because the current auction mechanism is supposed to be adjusted and the fees become more predictable. Only real scaling will help lessen the gas crisis.
At this time, network users still have to wait for the full deployment.
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