With total value stuck in decentralized finance on Ethereum now $ 89 billion, the market is eagerly awaiting to see if the launch of UniSwap v3 could be the catalyst for DeFi’s next big bull run.
Uniswap v3 promises new advanced features and yield generation opportunities with its launch slated for May 5th.
Uniswap focuses on three new features for liquidity providers: customizable capital deployment across a market’s price curve in the form of concentrated liquidity, tiered market maker fees delivering increased returns for volatile pairs prone to non-permanent losses and cheaper access to oracles for improved data integrity.
The expected reduction in Ethereum fees due to the EIP-1559 upgrade in July is also expected to boost the value proposition of v3, and the latest version of Uniswap will also launch on Optimism after the launch of the layer two stacking solution.
With its new concentrated liquidity feature that promises unique and customizable yield products for users, a nascent DeFi industry specializing in tokenization of future returns looks set to thrive.
1 / Uniswap v3 will improve the capital efficiency and liquidity of synthetic tokens built with UMA.
The defining characteristic of this upgrade is “concentrated liquidity”. It gives individual liquidity providers more control over how they provide liquidity.
– UMA (@UMAprotocol) May 3, 2021
Emerging projects like Alchemix have recently seen tremendous growth thanks to the promise to tokenize future returns, while Alchemist Coin uses Ampleforth’s V2 Geyser contracts to allow users to create non-fungible tokens representing claims at future costs of Uniswap liquidity providers.
In addition, new decentralized exchanges are innovating to facilitate the trading of token future returns, with Pendle raising $ 3.5 million from large investors last month to create an automated market maker specializing in time degrading assets.
Commenting on the completion of Pendle’s LBP public offering earlier this month, Cinneamhain Ventures partner Adam Cochrane described the upcoming exchange as creating “an entirely new market category in the DeFi space” .
I think this is one of the only new projects I’ve seen that I think creates an entirely new market category in the Defi space. pic.twitter.com/by1u3PZabT
– Adam Cochran (@adamscochran) May 1, 2021
Uniswap v2 in history
Uniswap v2 launched on Ethereum’s mainnet on March 18, 2020. At the time, the decentralized exchange had a total locked-in value of around $ 13.7 million, or TVL, while the industry’s TVL DeFi as a whole was around $ 550 million.
Although it was controversial from the start for the popularity of its open listing policy among scammers and imitators and its relatively high trading fees compared to some centralized platforms, Uniswap’s TVL has surpassed 100. million dollars in August as the industry’s TVL jumped to $ 7.5 billion in September.
After facing a series of vampire mining attacks from rival yield farming DEXs in an attempt to siphon cash from the platform, Uniswap dumped its native governance token to v2 protocol users in September and has closed the month with a TVL of over $ 2 billion.
As DeFi markets cooled in Q4 2020 as Bitcoin hit new all-time highs above $ 20,000, the sector’s TVL has exploded since the start of 2021, while the locked-in value in Uniswap has risen from 2.15. billion to $ 8.53 billion, according to DeFi Llama.
@Uniswap weekly trading volume just exceeded $ 10 billion for the first time !!!
$ 10 billion / week is over $ 0.5 trillion per year pic.twitter.com/ZibcDT9Zob
– Hayden Adams (@haydenzadams) April 20, 2021