Uniswap V3: An Early But Resounding Success
In late March Uniswap Labs unveiled its highly anticipated Uniswap V3 protocol. At the center of it was the concept of concentrated liquidity - the ability for liquidity providers (LPs) to make markets within customized price ranges, creating individual price curves in the process. The design promised to increase capital efficiency for LPs by as much as 4,000x by enabling LPs to provide the same liquidity depth as V2 within specified price ranges while leaving far less capital sitting idly.
Source: Uniswap Blog
Two months later, on May 5, Uniswap V3 finally launched and within its first two weeks it's already become a resounding success. It took only three days for Uniswap V3 to become the top decentralized exchange (DEX) on Ethereum behind Uniswap V2, and in the past seven days it facilitated more than $6.5 billion in volume.
In fact, Uniswap V3 has been so successful it is quickly approaching volume parity with Uniswap V2. At its current pace of growth it will likely surpass V2 by the end of May.
Ryan Watkins was a Senior Research Analyst at Messari. Previously, he worked at Moelis & Company as an Investment Banking Analyst where he worked on deals in the technology, telecom, and fintech sectors. Ryan graduated Magna Cum Laude from the Gabelli School of Business at Fordham University.