Amber Group and The Block released the Uniswap V3 forward-looking research report
Recently, Amber Group, a global encrypted financial intelligence service provider, and The Block jointly released the report An Early Look at Uniswap v3 LP Activity ("Forward-looking Uniswap V3 Liquidity Pool Trend") report. Founded in 2018, The Block is headquartered in New York, with teams all over the world. It has been deeply involved in the blockchain and encrypted finance fields. It is currently a leading digital asset research and analysis brand. The report was completed by Larry Cermak and Mika Honkasalo, members of The Block's research team. It analyzed Uniswap V3, which was deployed and launched earlier this month, from the perspective of market-making strategies, and explained in detail how its innovations will be better for readers in a macro comparison. Help traders improve capital utilization.
The main innovation of Uniswap V3 this time is to support custom liquidity range by integrating the Limit Order Book (Limit Order Book) with the automatic market maker (AMM) of the decentralized exchange. To put it simply, V3's system optimization encourages liquidity providers (LP) to adjust the liquidity price range according to market price changes, forcing LPs to compete with each other.
The report pointed out that people hope that a complete ecosystem of market-making tools can be formed around Uniswap V3 in the future, because this will help users gather capital and fight against other active market makers.
From the launch on May 5 to the writing of the report for more than a week, Uniswap V3 has over 80% of the trading volume compared to V2, but only over 10% of the liquidity and LP. For the small currency pairs that already have liquidity in V2, they do not have much willingness to transfer for the time being. This situation will continue until some capital chooses to actively transfer to V3 and start earning fees. As for those highly liquid currency pairs that are active on V3, they have created a currency pair logic that is completely different from V2 and other AMMs through continuous evolution. The report confirmed this argument with the examples of FEI/ETH and 1INCH/ETH, and finally pointed out that although V3 is gradually gaining an advantage in the trading volume of small and medium trading pairs, it will take some time to counterattack V2.
"Less than two weeks after the launch of V3, some of the larger 'blue chip' DeFi trading pairs have already begun to have enough chips to leverage the liquidity balance. Another catalyst is Layer 2 and Optimistic Rollup, because they can reduce liquidity The capital threshold of the supply is also convenient to adjust the position, which is fast and saves money." Larry explained. "Of course, the most interesting indicator in DeFi in the future may become 'the total transaction volume generated in Layer 2 designed for Uniswap'. It can tell us whether the migration of many other protocols can also be migrated from the base layer of Ethereum. (base layer) to be as seamless as the migration to Rollup; at the same time, we can also know whether Uniswap can stabilize its leading position in decentralized exchanges, and whether its competitors have the opportunity to start to erode it market share."
As an active exploration and thinking in the DeFi field, Amber Group will continue to pay attention to the development of Uniswap and more popular projects. After the release of this report, Amber Group also invited the two authors of the report, Larry Cermak and Mika Honkasalo, to be guests on the Amber Group podcast "Crypto Unstacked" to discuss in depth the dynamics and innovations of Uniswap V3. In addition, it is reported that the Amber Group will also join forces with well-known institutions and universities in more countries to bring more insights into the crypto-financial industry ecology.
Click on the following URL and provide your email address to view the detailed report:
https://www.theblockcrypto.com/research/105008/an-early-look-at-uniswap-v3-lp-activity
Podcast listening address:
https://cryptounstacked.simplecast.com/episodes/deep-dive-uniswap-v3
