Partnered With:

Uniswap 3.0 has been launched and a new feature called "Concentrated Liquidity" helps attract large volume traders

Read this article in 5 Minutes

V3 has not yet launched a new liquidity mining plan for this version.

Version 3.0 of Uniswap went live on May 6, an upgrade that is widely expected to make automated market makers more attractive to the wealthiest cryptocurrency traders and funds.

Uniswap, which was first released on Ethereum in late 2018, holds $7 billion in assets, according to Defi Pulse. According to Uniswap's own statistics, the V2 version of Uniswap racked up $1.6 billion in transactions in the past 24 hours.

Uniswap V3 is a big step forward for this agreement, "Peter Johnson of Jump Capital wrote in an email. "It gives market makers more flexibility in how to provide liquidity in the agreement, which makes the provision of liquidity more attractive and should make Uniswap's trading more efficient for traders." Jump Capital is a venture Capital arm started by the head behind Jump Trading. Jump Trading, founded in 1999, is an influential high-frequency and algorithmic Trading firm.

The Uniswap team has launched a liquidity transfer contract and user front end to help liquidity providers migrate market-making funds from Uniswap V2 to V3. The liquidity transfer contract and user front end are also applicable to help liquidity providers migrate market-making funds on Sushiswap.

The main innovation in this new version is "centralised liquidity".

Centralized mobility makes AMM's basic functionality 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 the two tokens. The price is determined only by the ratio of the two tokens.

When traders buy or sell tokens from the AMM pool, they pay a small fee for each transaction. The fee would then be prorated to all depositors.

Centralised liquidity allows people to lend money to a pool known as a liquidity provider (LP) to determine within which band their deposits will trade. They can deposit 100 USDCs and 100 DAI, but their USDC will never be lower than 0.99 DAI and never exceed 1.01 DAI.

That's why most people at DEFI think the new version of Uniswap will attract more "whales," or large investors.

It is also a clever way to tackle the problem of "temporary losses", which has long plagued liquidity providers of AMAs. In a classic AMM, when one of the two pools gains 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, working capital providers can not allow deposits to trade within the limits of possible temporary losses. The new version will also allow savers to define different transaction fees, which will make it more attractive and provide liquidity for tokens that trade less frequently.

At this time, there is no new liquidity mining program for Uniswap V3. According to the Uniswap team, the liquid mining program can be introduced through a standard governance process.