Uniswap is, to date, the most widely used decentralized exchange platform (DEX) on Ethereum (ETH), across all versions. Like all applications hosted on the blockchain with smart contracts, Uniswap suffers from the congestion problems encountered by the blockchain. Fortunately, the unicorn has a solution and it is called Optimism.
Uniswap sets sail on Optimism
In March, the Uniswap DEX unveiled the third iteration of its protocol: Uniswap V3.
At the time of its release, the main innovation offered by Uniswap V3 was in the introduction of the concept of “liquidity concentration”. Simply put, liquidity providers will be able to define a price range over which their liquidity can be used. Outside this range, their liquidity is not used by swaps and, therefore, the providers are not exposed to the famous impermanent losses.
However, the concentration of liquidity was not the only highlight of this new version. Uniswap also announced the imminent migration of its platform to the second layer solution Optimism.
After several months of hard work, the Uniswap protocol teams have announced the launch of an alpha version of DEX on Optimism. As its name indicates, this version will be far from offering the performance announced by the teams of the second layer solution:
“On this alpha release, Optimism will support an initial throughput of 0.6 transactions per second. As Uniswap V3 is currently one of the few protocols deployed on Optimism, this should result in a transaction capacity roughly equivalent to L1. Unlike L1, transactions on Optimism are confirmed instantly – no more pending or stalled swaps.”
As a reminder, the theoretical throughput of the Optimism solution, once fully deployed, should approach more than 20,000 transactions per second. This is a far cry from the 0.6 transactions per second announced by Uniswap.
A reduction of the fees to come
Although the throughput offered by this alpha version of Optimism is far from the maximum capacities, the benefits are, as for them, present. Indeed, Optimism has the advantage of offering almost free transactions.
Thus, according to Uniswap’s estimates, the use of its version deployed on Optimism should allow its users to divide by 10 the transaction fees necessary to interact with the protocol.
Another major advantage is that all transactions are instantaneous on Optimism. In practice, this means that all swaps carried out on Optimism will also be instantaneous.
Some negative points
Of course, an alpha version means an impacted user experience. Therefore, the Uniswap teams warn about several inconveniences that may occur in the coming weeks:
- Downtime: the network will suffer from both planned and unplanned downtime, during which swaps will be impossible;
- Withdrawal period: Optimism being based on Optimistic Rollups, withdrawals have a one-week escrow period before being recoverable on the Ethereum mainnet;
- The small number of assets: at launch, only a few assets will be supported, namely ETH, USDT, WBTC, DAI and SNX.
Finally, the quest to make Ethereum scalable is a never-ending task. In parallel with the development of these second-layer solutions, Ethereum’s blockchain is also about to undergo changes via the London hard fork, which is expected to be activated on August 4.
