Uniswap v3 Details Announced

The Big news from Uniswap in March concerns the details of the up-and-coming Uniswap v3.

The leading decentralised exchange has announced major changes/improvements to the way in which it handles liquidity.

In v2 liquidity was provided using a 'constant product' curve. This simple mechanism enabled almost anyone to create or seed a market by providing an equal amount of two paired currencies. Liquidity providers then shared the 0.3% trading fees - nice and simple! The problem is that Uniswap regularly utilises $5bn of capital to support $1bn worth of trades, per day. So it is capital inefficient.

Fast Forward to Uniswap v3 (Release date is 5th May). The plan is to move away from the 'continuous' constant product curve and allow liquidity providers to specify distinct price ranges (Concentrated liquidity positions'), where they want to supply liquidity. The chosen range(s) will have to be managed and that will, unfortunately, favour professional liquidity providers over retail providers. Overall, the liquidity will be substantially more efficient and traders will benefit via even lower fees.

A very surprising non-fungible token (NFT)

The non-fungible token market has been on the rise recently. But, who would have thought that Christie's auction house would sell an NFT for a staggering $69m and accept payment in Ethereum?

Amazingly, this is what happened on 11th March 2021. when artist Mike Winkelmann (aka Beeple), who creates an artwork every day, sold the first 5,000 days worth of art, in a single collage / .jpg, at auction, watched by 22m people at the end of the auction.

The rise of derivatives

Within the crypto world, the introduction of derivatives such as Futures, Forwards, Options and Swaps are providing secondary markets and are becoming an integral part of the crypto landscape.

The advent of smart contracts, means that derivative contracts can be created programmatically and without a counter party. This means that crypto projects are appearing which enable retail investors to enter areas previously the exclusive zone of professionals.

Derivatives Platforms are taking their rightful place in the crypto ecosystem

Leading Derivatives Platforms

The Crypto derivatives space is expanding, with many crypto projects addressing different areas. This is a short list of some of the main projects.

Derivatives Platforms:
  • Synthetix (Uses Synthetic assets to gain exposure to traditional markets: Forex, Commodities, Bonds etc)
  • dYdX (Hybrid - Dex/Lending/Leverage, provider of permission-less derivatives)
  • Uma (Creation of personalised synthetic tokens)
  • Augur (DeFi prediction market, for all kinds of events)
  • Erasure (Decentralised market for stock-trading data)
  • Opyn (Decentralised insurance platform for DeFi deposits)
  • Swap Rate (Derivative market for interest rate swaps)

All of these platforms offer multiple potential instruments for CyberTrade to utilise in its quest for yield