- Uniswap V2 has taken the crypto world by storm, but it’s far from perfect
- High fees, invisible order books, and slippage are some of the issues present in the system
- Will V3 fix these, and when can we expect it?
Uniswap has taken the cryptocurrency world by storm this year, which is incredible given how backward the entire is experience is compared to modern centralized exchanges. However, its completely decentralized nature, plus the huge amounts of money being made on it, will ensure that it remains a key player in the space for some time. There is no denying that it needs updating however, and cryptocurrency entrepreneur Jason Smith today posted a Twitter thread that pulls together recent comments from Uniswap founder Hayden Adams which allows us to piece together how Uniswap V3 might look and when it could launch.
— Jason Smith (@iwearahoodie) September 22, 2020
Slippage and Capital Efficiency The Key Areas
Uniswap launched V2 in May 2020, but at the time of this launch Adams was, like all good tech entrepreneurs, already working on V3. The first public mention of Uniswap V3 from Adams came in December 2019 when discussing volatility and trading fees on the platform:
Yeah. In low volatility, ideal fee is smaller.
Ideal fee is just based on the (price) volatility over time, not how quickly a single trade moves the price (liquidity)
This is Uniswap V3 stuff, I don’t wanna spoil too much 😏
— Hayden Adams 🦄 (@haydenzadams) December 3, 2019
When it comes to changes for V3, capital efficiency and slippage are the two main areas the new release will reportedly look to tackle, with Adams saying that “Uniswap V3 will face slippage and capital efficiency head on to prove AMMs can outcompete traditional exchanges on all fronts”.
This will be music to the ears of regular users who often complain of and failed transactions, which still involve a fee being taken.
Adams Looking at “Very Different Approach to Fees”
On the subject of fees, the extortionate cost of transacting on the exchange is another major bugbear of almost all Uniswap users. This isn’t something that Uniswap can control if it wants to stay part of the Ethereum network, which it most certainly does, but Adams promises that the team are “working on a very different approach to fees” that he says is “better” than the existing system. Part of this is the removal of token approval costs.
Uniswap V3 Set for 2021 Launch
So when will Uniswap V3 be with us? Adams has already given hints that users would have to wait until 2021 to see the unicorn’s new colours, which would make sense given that V1 launched in 2019 and V2 launched in 2020.
In February this year, Adams said that V3 was “still in early stage research” and would take “much longer to complete” than its predecessors. Part of this is due to the increased complexity of the new platform but also because “V2 will inform V3”, meaning that the team are actively studying various aspects of the V2 platform so they know what to fix for V3.
Adams offered an update of sorts at the time of the V2 launch in May when he said that he was “already speccing out a Uniswap V3”. Smith argues that V3 may come sooner than indicated however following the deployment of the UNI token, saying that “One guess is token needed to come before V3 so V3 is imminent…”
Strap Yourselves In – This Unicorn is Going Places
If all this wasn’t enough to get Uniswap fans excited about the future they could well explode at Adams’ desire to “help build a v3 that is 100x better than v2” and his assertion that the next iteration will be a leap forward rather than a step:
There is no token currently and we have not released any plans to do one.
No internal decision has been made on this front either.
Our current focus is on Uniswap v3 – a third iteration of the protocol which I think is going to be game changing to say the least 🙂
— Hayden Adams 🦄 (@haydenzadams) July 7, 2020
Whenever Uniswap V3 does go live, it seems set to shake up the pack once again.