Uniswap V3 is here, but was it worth the wait? March 17–24

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Uniswap V3 was publicly announced yesterday and I didn’t actually get an opportunity to jot down about it, so I needed to dedicate this article to a evaluation of V3 and the AMM house normally.

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My preliminary response to Uniswap V3 in a single, brutally trustworthy phrase, was “meh.” But it surely bought higher after I learn additional into it, so let’s unpack what’s taking place right here.

Uniswap V3 is a strong improve and it’s clear that loads of work went into it. But it surely under-delivers in comparison with the overrated image most of us had of the brand new Uniswap. Individuals anticipated Hayden Adams to silence everybody and roll-out this wonderful impermanent loss-protected and tremendous environment friendly AMM that would go away Uniswap towering over everybody else.

As a substitute, V3 truly worsens impermanent loss, relying in your private place and market motion.

The important thing innovation of V3, and the mechanism that worsens impermanent loss, is the idea of concentrated liquidity. Which means liquidity suppliers can now select the value ranges wherein they commit liquidity, as an alternative of overlaying the whole zero-to-infinity vary. To elucidate the mechanism, it’s vital to first perceive how AMMs work, in quite simple phrases.