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Uniswap Unveils Vision for its v4

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Uniswap Labs, the leading decentralized finance (DeFi) protocol, has made an exciting announcement as they unveil their vision and draft code for the highly anticipated Uniswap DEX v4. 

They aim to improve functionality for both liquidity providers and traders in Uniswap DEX v4. This release introduces new features that emphasize scalability, efficiency, and adaptability, positioning Uniswap at the forefront of the decentralized exchange ecosystem.

Three essential improvements are mentioned in their updated version suh as:

License and Governance

The code for this version will be made available under a Business Source License 1.1, which restricts commercial or production usage of the v4 source code for four years before converting it to a perpetual GPL license. Similar to v3, Uniswap Governance and Uniswap Labs can provide license exemptions.

Like v3, Uniswap Governance and Uniswap Labs will continue to provide license exceptions. Version 3 of the Protocol will also form the foundation for the Protocol’s pricing mechanism. The Governance can decide to impose a maximum Protocol charge on any pool by a simple majority vote. The white paper provides a wealth of information about the pricing structure.

Hooks & Custom Pools

Normally, each Uniswap liquidity pool has a lifespan. A pool’s lifespan includes multiple events. There is a default fee tier when a pool is set up. Liquidity can be increased, decreased, or changed. Of course, users also exchange tokens. These lifecycle events are executed in a specific order and are closely connected in Uniswap v3. 

Improved Architecture and Gas Savings

With Uniswap v3, each pool now has its own contract, which increases the cost of creating a new pool and conducting multi-pool swaps. In version 4, swaps will no longer require gas-intensive token movements across pools hosted on different contracts. Preliminary estimates suggest that v4 can reduce the gas required to create a pool by over 99%. 

Uniswap claims to be the largest decentralized exchange system with a trade volume of over $1.5 trillion per year. However, they are publishing the preliminary code immediately so that v4 can be produced in the open, with constructive criticism and participation from the community. 

For people who would like to contribute to the open-sourced, early version of the Uniswap v4 core and periphery repositories, click here.

Read also: DeFi Insurance: The Risks, Benefits & Providers – A Beginner’s Guide

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