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Previously, liquidity providers will hold money as a fund for an unlimited variety of prices; but, Uniswap v3 provides “concentrated liquidity,” which gives individual liquidity providers leverage over the price levels at which their capital is committed. In comparison to v2, liquidity suppliers will have liquidity of “up to 4000x capital efficiency.”
Other functions, such as various fee rates and specialised oracles, are claimed to be “easier and less expensive” to implement.
Hayden Adams, founder of Uniswap Labs, addressed the launch, stating that the protocol acts as a “essential infrastructure” for decentralised finance. He continued, saying:
“Uniswap v3 now paves the way for automated market makers to outcompete both stablecoin-focused and traditional exchanges on trade execution quality.”
Recently, analysts at Intotheblock stated:
In just 78 days of 2021, the protocol did $73.1b in traded volume and over $219m in fees.
As well, the Total Value Locked reached a new ATH of $5.23b pic.twitter.com/yeklzbFt8V
— IntoTheBlock (@intotheblock) March 20, 2021
Curve, YieldSpace, Balancer, and DODO, among other ventures in the DeFi market, have been attempting to increase liquidity in decentralised exchanges. Although Curve was able to conduct stablecoin-to-stablecoin transactions, Balancer, a protocol for programmable liquidity, recently implemented a key feature for its V2 protocol that maximises the returns of liquidity providers.