- The decentralized exchange (DEX) Uniswap confirms progress on its next-gen model V4, slated for launch after Ethereum’s Cancun upgrade scheduled for late September 2023.
- Uniswap V4’s release comes with a host of improvements, notably the ‘Hook,’ a plugin enabling customization of automated market maker (AMM) pools.
Uniswap, the leading decentralized exchange (DEX), is making notable progress on its next-generation model, V4, expected to launch following the Ethereum (ETH) Cancun update scheduled for the end of September 2023. Erin Cohen, the Governance Lead of Uniswap Foundation, revealed that the security audit process for Uniswap V4 would commence after the completion of Cancun’s upgrade.
What to Expect from Uniswap V4?
In the new V4 version, Uniswap plans to introduce an ability to customize liquidity pools (LP), known as trading pairs. Compared to the current version 3, V4 is expected to significantly improve both capital efficiency and gas efficiency of the protocol.
The standout feature in the new upgrade is the ‘Hook,’ a plugin designed to create custom automated market maker (AMM) pools. This feature allows dynamic fee adjustments according to market conditions, limit orders, and enables settings for dollar-cost averaging (DCA), dispersing buy orders at regular intervals.
The Impact of Cancun Upgrade on Uniswap V4
Uniswap V4 also includes a new mechanism called ‘Flash Accounting’ which will considerably reduce gas costs for transactions spanning multiple pools. This innovation leverages Ethereum’s protocol improvement proposal, EIP-1153 ‘Transient Storage,’ scheduled to be integrated into the Cancun upgrade. Thus, the success of Uniswap V4’s launch significantly hinges on the Cancun upgrade.
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Cohen stresses that V4’s implementation schedule is a guideline and could be altered due to factors like a potential delay in Cancun’s hard fork, an extension of the audit process, among other considerations.
Meanwhile, Ethereum’s blockchain developers consolidated a list of Ethereum Improvement Proposals (EIPs) for the upcoming ‘Cancun’ upgrade during a meeting on June 8. The most prominent amendment, EIP-4844 ‘Proto-Danksharding,’ aims to cut down transaction costs for data transfers from Layer 2 (L2) to Layer 1 (L1), enabling a drastic reduction in transaction fees for Layer 2 scaling solutions like Optimism (OP) and Arbitrum (ARB). This EIP is a vital step for Ethereum’s future implementation of sharding, a technique for partitioning blockchains.
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