It’s update season on Ethereum (ETH). After the recent rollout of Uniswap V3, it’s the turn of its direct competitor and fork SushiSwap to upgrade its decentralized exchange platform (DEX).
SushiSwap gets updated
On Tuesday, July 20, Sushiswap CTO Joseph Delong announced an update to the protocol at the Ethreum Community Conference (ETHCC) Paris. He took the opportunity to unveil a new hybrid automated market maker (AMM) called “Trident”.
In effect, Trident aims to tackle all parts of the market at once. To do so, this new MA will be divided into 4 sub-products:
- A so-called ConstantProductPool MA, which offers fairly traditional liquidity pools with 2 equally divided (50/50) assets;
- An AMM called HybridPool, which focuses mainly on exchanges between stablecoins, like Curve;
- An AMM called ConcentratedLiquidityPool, which allows liquidity providers to determine a price range over which their liquidity will be used, similar to Uniswap V3 ;
- A WeightedPool AMM, which allows the creation of pools of assets, the allocation of which can be customized, similar to Balancer.
According to the information revealed by Joseph Delong, these products have been designed to be the most gas efficient. In addition, the creators of the liquidity pools will be able to determine the swap fees that will be applied to them.
Although in practice, these 4 products do not represent in themselves any real evolution, their combination can make SushiSwap an unavoidable platform.
Match making and new features
Under the hood, these 4 WMAs will work thanks to a new match making algorithm, whose mission is to match orders. Called “Tines”, it introduces new features relatively innovative for this type of DEX, such as the presence of order limits.
Concretely, Tines will have to choose which of the 4 MAs will be the most optimized for a given swap. He will also be able to go through several different pools and assets, if this allows a more efficient swap.
In addition, a service called “BentoBox” will allow unused funds to be deposited on other lending protocols, in order to increase returns, even when no swap is performed.
More interestingly, when a user wants to submit an order limit, their funds will also generate a return until the order is executed.
The race to the second layer
In parallel, its direct competitor Uniswap has just announced the deployment of a version of its DEX on the second layer solution Optimism. The goal of this move is to provide a better user experience, virtually free of charge.
Although currently in alpha version, this migration will allow the 2 projects, both Uniswap and Optimism, to finalize the last details before a more global deployment without safeguards.
For its part, SushiSwap does not seem to be exploring a migration to Optimism. However, DEX has already migrated to many chains, such as the Binance Smart Chain, Fantom, xDai or more recently Polygon.