: UniswapX will change the rules of DEX, MEV, and interoperability games

Original author: Dan Robinson, Partner at Paradigm

Original translator: Luffy, Foresight News

Uniswap Labs announced the launch of a permissionless, open-source (GPL), Dutch auction-based protocol for trading across AMMs and other liquidity sources. Paradigm partner Dan Robinson tweeted about the potential of UniswapX and Uniswap v4 to revolutionize decentralized exchanges. Here is the translation by Foresight News:

I believe UniswapX will change the rules of decentralized exchanges (DEXs), MEV, and interoperability games for the following five reasons.

1. The UniswapX architecture opens up a broad design space for DEXs.

Executed orders (what we call "intentions") can be more efficient, flexible, and ultimately more powerful than trades.

2. It provides a better foundation for auctioning off MEV to users.

Today's OFAs (order flow auctions) are typically built on top of transaction-based trades, which is an awkward choice (often requiring multiple transactions and extra fees on-chain).

I believe tomorrow's OFAs will be built on top of UniswapX.

3. Off-chain order matching is still in its early stages.

I believe there is much work to be done in improving off-chain order matching (including making it as decentralized as possible and protecting privacy).

UniswapX is a necessary step towards this goal, and I have many ideas on how to push it further.

Off-chain orders are more "opaque" than on-chain trades, and they are mathematically easier to handle. They can be aggregated, bundled, added, removed, compressed, encrypted, proven, challenged, and more. This opens the door for a lot of innovation in the field of order matching.

In the long run, I believe UniswapX's order matching component could even become an ideal application for decentralized block builders like Flashbots' SUAVE.

Once SUAVE is live, UniswapX might be one of the first applications to showcase and leverage its powerful capabilities.

4. Seamless cross-chain and cross-rollup transactions will be revolutionary.

In order for Ethereum's Rollup-centric roadmap to work, users need to be able to transfer assets between Rollups cheaply, quickly, and easily.

I believe UniswapX has designed the right way for cross-chain transactions.

5. UniswapX is a supplement to Uniswap v4, which aims to support new technologies to continuously improve passive liquidity supply.

This reflects a very fundamental belief of mine: the improvement of the Uniswap ecosystem will not come from zero-sum redistribution.

If traders' transactions do not get optimal execution, they will eventually move elsewhere.

If liquidity providers suffer losses, they will eventually leave as well.

We need to improve prices for traders, but not at the expense of liquidity providers. UniswapX is one way to achieve this improvement.

In summary, I believe UniswapX v4 and UniswapX point the way forward for the future of DEXes. Not because they are the final conclusions of protocol design, but because they open up the design space for DEXes.