One of the most significant crypto news of the day concerns the Uniswap (UNI) crypto. Indeed, as announced on March 23, it is today (May 5, 2021) that Uniswap releases its v3. Find out why this is a significant milestone for the Uniswap project.
Before we talk about v3, it’s significant to recall what Uniswap is. The crypto was created in November 2018 and runs on the Ethereum blockchain. Uniswap is among the most significant applications of decentralized finance or DeFi. With over $9.8 billion under management, Uniswap ranks 4th among DeFi apps, just behind Compound, Aave, and Maker.
Uniswap is a decentralized crypto exchange that allows trading ETH and ERC20 tokens. Unlike traditional crypto trading platforms, Uniswap works thanks to the funds made available by its users. Indeed, LPs or Pool Liquidators are the people who lend cryptos so that Uniswap has enough reserves to handle the demand. They can increase or withdraw their funds at any time. In return, these LPs receive income. For example, each transaction results in a 0.3% fee that is fully redistributed to the LP based on the capital invested.
At present, the Uniswap share price is around $42. Its capitalization is over $20 billion, which ranks UNI as the 9th largest crypto in the world.
After v1 in November 2018 and then v2 in May 2020, Uniswap welcomes a v3 on May 5, 2021! This update was highly anticipated by the Uniswap community as it should boost the attractiveness of the project. To put it simply, v3 and its two-tier Optimism update include two main changes.
First of all, the transaction fees will decrease compared to v2. But more importantly, the efficiency of the Uniswap protocol will increase. In concrete terms, v3 will allow the profitability of LPs to jump. Uniswap claims a 4,000 times higher profitability! In concrete terms, LPs will have to invest less cryptos and will generate more profits. At the same time, the associated risks will also be lower.
In concrete terms, v3 is a win-win upgrade for Uniswap users, whether they are LPs or traders. The implementation of this v3 should have a positive impact on the Uniswap price. To be continued…