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“Amulets” could be a better word than “tokens” for some of the crypto assets that appear in blockchains today.
Version 2.0 of Uniswap is already alive and, among other things, an amulet coin machine, although they are probably still called “tokens” by everyone. Tokens are little more than keys with which you can access something, for example a game or a mixer. Amulets have surprises in them. These can create something new from the inside, for everyone who can unlock it..
“Version 1 was almost like a proof of concept,” Uniswap founder Hayden Adams told a media company. “This was the first implementation of the protocol. This had many good things, and this is proven through use and traction. “
Uniswap is an Ethereum system that allows ERC-20 tokens to be exchanged for others, using Ethereum’s central cryptocurrency, ETH, as a trading tool. According to Uniswap.info, the company currently has liquidity of $ 43 million or assets specified in the protocol, with $ 13 million active within the platform in the past 24 hours. This is one of the so-called “financial primitives” that promote decentralized financing (DeFi).
However, Adam believes the platform can go a lot further. Uniswap V2, which he described in a blog post in March, works just like Uniswap. but This removes the main restrictions that are to make all token exchanges through ETH. It also adds some new features and a new oracle system that many other DeFi projects may find useful.
Stranger amulets
The main feature of the new version of Uniswap is the possibility for everyone to create any token parity if it exists on Ethereum.
This will likely lead to unexpected use cases, but the most obvious use outside of the rule is a new way of using stablecoins.. The most popular ERC-20 tokens like MKR, ZRX, WBTC, OMG are likely to be paired quickly with stablecoins as well as USDT, USDC and dai.
After all, Coinbase has already added liquidity to the ETH / USDC parity in the first version of Uniswap. “Having a couple of stable coins in Uniswap is a pretty big improvement. It’s probably the most requested thing since Uniswap, “said Adams.
The five main advantages of a direct token are the following should lower transaction fees for merchants, since V1 always requires two trades between the two ERC-20 tokens. Another advantage is that liquidity providers can reduce their volatility on one side of the pool. An MKR / ETH pool is volatile at both ends, but an MKR / USDT pool should only be volatile on the MKR side. “Many people don’t want exposure to ETH Zurich,” said Adams.
As previously mentioned, these token pairs are created by users. If anyone thinks that Wrapped CryptoKitties (WCK) and SOOCKS should have token parity, that person can configure it. Users pay a small 0.3% commission to the liquidity pool for each trade, which ultimately goes back to the liquidity providers, where everyone receives them in proportion to the amount of the pool they have booked.
Back to our amulet thesis: Every time someone contributes to the Uniswap pool, he does so You will receive a token, the value of which grows in the meantime People use this pool. This is a token that represents the value in two other tokens. It’s like having part of a piece of land that grows under your feet. Adams also said he expects these liquidity pool tokens to appear in other DeFi apps soon.
The oracles are published in a new version
Uniswap also adds an oracle service, as a magician’s first job is to learn to see what is not seen. The platform will not use these oracles, but this is one way to improve the price signals that the protocol already indicates. “Uniswap is basically a pricing mechanism,” said Adams.
While the company behind the protocol never recommended Uniswap as a price oracle, several projects use it this way. Uniswap monitors the market well. However, If a project needed the price of each block exactly, it wouldn’t be very safe today.
“There is a high demand for oracles and it is very valuable to do a chain price increase, especially one that is decentralized,” said Adams.
Uniswap adds a time-weighted oracle service that makes dishonest activities more expensive and enables flexible price measurements in every period. Adams hopes that many oracle-dependent projects will at least integrate this system into their data sources or even make full use of it. “This is the service Uniswap v2 provides to the world and I think it will indirectly benefit the Uniswap protocol,” said Adams.
There are also quick loans
Uniswap also offers functions for quick loans. Fast loans were controversial, but offer compatibility. In addition, they have the advantage that they are only effective if everything works properly.
With these loans, the user can borrow any amount up to the total available liquidity provided the amount is returned in the same transaction.. A talented software developer can program a bot to monitor certain times in the market when prices are out of sync and use arbitrage opportunities to quickly make profits while restoring balance. With fast credit, traders don’t even have to worry about the cost of running these businesses.
Fast loans also allow Uniswap users to complete fewer transactionsAs a result, tariffs are reduced. However, by creating a new use case with lower initial costs, you should increase the number of fees that liquidity providers deserve.
Here, too, assets can effectively go back and forth at the same time, but did somehow make more profit? Amulets.
A self-funded protocol
Uniswap makes no profit from its protocol, all profits go to liquidity providers. But it’s a VC-backed project with a first round of funding from Paradigm in April, so no one should expect the intention to come out.
Uniswap v2 leaves the option open to redirect 0.05% of all transactions to pay for the protocol itself. Adams declined to say more when he wrote in his original post: “The best version of Uniswap will be one that autonomously promotes contributions to its own growth and development, as well as to the vast ecosystem in which it exists.”
“I’m a big fan of automation as a priority and governance as a last point,” he said in an interview. “It’s easier to rely on math and trust it.”
Unswap had an impressive lap. In about 18 months, it entered the same area as Bancor, a token exchange system that reached $ 150 million in its original offer (ICO). Uniswap simplified the design using the ETH instead of a new ERC-20 token. In a last comparison in February 2019, Uniswap and Bancor were equivalent. DappRadar today has a volume of USD 213,000 for Bancor in the last 7 days and USD 38 million for Uniswap.
“Uniswap has had $ 2 billion in retail sales annually for the past three months,” said Adams, which means $ 6 million a year in commissions. For the most part, the mind is already out of the lamp and is now making its movements.
Translated version of Brady Dale’s article published on CoinDesk.
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