V2 vs. V3 Volume
So, how is the adoption of v3 going?
Number of swaps on v2 are trending down
- The number of swaps on Uniswap v2 are much higher than v3 even after a 5 months of release
- The number of swaps is however trending down on v2 and maintaining a consistent level on v2.
- The number of swaps on v2 has decreased by almost 3x since it's peak in May 2021.
Legend:
- Uniswap v2 - Green
- Uniswap v3 - Blue
Uniswap v3
Uniswap is the leading decentralized exchange (DEX) on Ethereum network and spawned many derivatives on other blockchain networks. Therefore, it's a big deal when they release a new version.
In it's launch blog post, the Uniswap team wrote that they wanted to make Uniswap "the most flexible and efficient [automated market maker] ever designed" with the v3 launch. The promised "up to [4,000 times] capital efficiency relative to Uniswap v2."
Concentrated Liquidity
The key change that v3 brought forth was "concentrated liquidity." Concentrated liquidity allows liquidity providers (LP) to set minimum and maximum prices on their portion of any given pool thereby giving LPs more control over the price ranges in which their capital is used, with limited effect on liquidity fragmentation and gas inefficiency.
New fee structure
The v3 also allows different pools to be created with different fees. Before v3, all trades in all Uniswap pools had a 0.03% fee for trading. Uniswap v3 brought community governed flexibility through multiple fee tiers:
- 0.05% – expected for stablecoin pools like DAI/USDC
- 0.30% – for standard non-correlated pools like ETH/DAI
- 1.00% – for exotic non-correlated pairs
Full list of new features
Here is the full list of features Uniswap v3 launched with:
- Concentrated Liquidity
- Active Liquidity
- Range Orders
- Non-Fungible Liquidity
- Flexible Fees
- Advanced Oracles
- License