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Breaking News: Uniswap unveils v3 details: launching on 5/5, optimizing AMM with Concentrated Liquidity, Optimism

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Breaking News: Uniswap unveils v3 details: launching on 5/5, optimizing AMM with Concentrated Liquidity, Optimism

Uniswap has finally announced the details of v3. Let's quickly take a look at its key updates:

Table of Contents

Uniswap has finally announced the details of v3. Let's quickly take a look at its key updates:

  1. The mainnet will launch on May 5th and will integrate the Layer 2 scaling solution Optimism.
  2. Optimized AMM pricing model: The previous constant product model is changing, and the new feature is Concentrated Liquidity positions, which allows LPs to decide on the price range they are willing to provide liquidity for without needing the assets' pricing to move between 0 and infinity.

4. In v3, LPs can combine positions from various trading pairs to achieve a function similar to an order book or AMM curve. Therefore, an infinite number of strategies can be integrated into a single liquidity pool, providing a comprehensive curve for users to trade.

5. Concentrated Liquidity means that even if LPs only provide partial asset liquidity, they can earn the same amount of trading fees, allowing them to invest more of the assets they want in their portfolio. This increases capital efficiency, where LPs setting the price range at 0.1% can achieve up to 4000 times capital efficiency.

For example: LPs for v3 DAI/USDC can concentrate $5 million in funds and set the liquidity price range between 0.995/1.005. This will earn the same trading fees as having $2 billion in liquidity spread across all price ranges in v2.

6. If the market price moves outside the price range set by the LPs, the LPs' assets will fully convert to one of the assets in the trading pair.

7. Others: Fee tiers based on processing speed, advanced oracles, and bounded orders.

For more detailed information, please refer to the original article: https://uniswap.org/blog/uniswap-v3/