Uniswap v3(uniswap.org)
uniswap.org
Uniswap v3
https://uniswap.org/blog/uniswap-v3/
121 comments
Can someone ELI5 how this compares w/ SushiSwap?
At the moment SushiSwap has virtually none of the features listed in Uni V3. Sushi is coming out with its own new features that will differ from this named BentoBox and others. Both Uni and Sushi are innovating in their own ways which is great to see
There's a large difference, at least compared to Uniswap V3. Read the features to see what the new version has that SushiSwap doesn't.
For the record, SushiSwap is a fork of Uniswap, so the initial features of SushiSwap was all that Uniswap had.
By now, they mainly differ in that SushiSwaps governance seems to still go forward while Uniswap has been stuck since the requirement for doing proposals is too high.
For the record, SushiSwap is a fork of Uniswap, so the initial features of SushiSwap was all that Uniswap had.
By now, they mainly differ in that SushiSwaps governance seems to still go forward while Uniswap has been stuck since the requirement for doing proposals is too high.
All new features compared to SushiSwap.
Interesting to note the updated license for v3, in an attempt to prevent another SushiSwap
'Uniswap v3 Core will launch under the Business Source License 1.1—effectively a time-delayed GPL-2.0-or-later license. The license limits use of the v3 source code in a commercial or production setting for up to two years, at which point it will convert to a GPL license into perpetuity'
Interesting to note the updated license for v3, in an attempt to prevent another SushiSwap
'Uniswap v3 Core will launch under the Business Source License 1.1—effectively a time-delayed GPL-2.0-or-later license. The license limits use of the v3 source code in a commercial or production setting for up to two years, at which point it will convert to a GPL license into perpetuity'
Since the SushiSwap was anonymous fork of Uniswap, I'm wondering how they plan to prevent an another anonymous fork just by using a different license?
Through the only avenue that licenses matter - litigation.
Honestly they probably can't prevent forks. It's more of a discouragement, since as a forker you'd be subject to being sued if they can figure out who you are.
So basically this will prevent American citizens from forking, but international folks will have free reign to fork as they wish.
One of the big selling points of the original uniswap was that everything was open source as opposed to bancor. I am disappointed by this.
The use of the BSL 1.1 for Uniswap Core is one of the most interesting parts of this announcement. It will certainly slow wholesale cloning of their smart contracts.
Wonder how that will be enforced given the decentralized nature of these contracts.
Well, the folks putting out the unlicensed clone would have to be anonymous to keep from being sued for copyright infringement. But if you are anonymous in the defi space, users are a lot less likely to trust your product.
>But if you are anonymous in the defi space, users are a lot less likely to trust your product.
Isn't the whole point of difi that you don't have to trust them?
Isn't the whole point of difi that you don't have to trust them?
Not that much less. SushiSwap is run by mostly anons and it is the #2 AMM.
The smart contracts live entirely on the blockchain, and therefore cannot be shut down absent shutting down or hard forking the entire Ethereum network.
However 99% of Defi users interact with these smart contracts through web-based front ends that are centrally hosted like any other site.
In the case of a copyright violation, Uniswap LLC could get an injunction against any web front end that interacts with the forked DeX.
However 99% of Defi users interact with these smart contracts through web-based front ends that are centrally hosted like any other site.
In the case of a copyright violation, Uniswap LLC could get an injunction against any web front end that interacts with the forked DeX.
>In the case of a copyright violation, Uniswap LLC could get an injunction against any web front end that interacts with the forked DeX.
How big of a problem is this? As we seen with piracy sites these court ordered blocks aren't exactly effective.
How big of a problem is this? As we seen with piracy sites these court ordered blocks aren't exactly effective.
You can host on IPFS and there would be no way to stop the service. Just the routing to it perhaps. But you can go a step further and use a ENS domain and point it to your IPFS site. Truly permisionless and decentralized.
Technically the interface is still GPLv3 so just changing the smart contact locations isn't in violation of any licence agreements.
> Uniswap LLC could get an injunction against any web front end
Can they? The front end is still GPLv3.
Can they? The front end is still GPLv3.
> wholesale cloning of their smart contracts
Maybe stop cloning by US entities, if Uniswap is a US company, but it won't stop many other entities to clone it if the contracts have their source available.
Maybe stop cloning by US entities, if Uniswap is a US company, but it won't stop many other entities to clone it if the contracts have their source available.
True, it's up to Uniswap to enforce if cloned and the local venue's respect of software licenses. But an intentional clone that's clearly copying the code and under threat of litigation likely won't be appealing for a lot of exchanges to list.
> clearly copying the code and under threat of litigation
Half of the ecosystem wouldn't exist if people were scared of litigation and/or not copying code/ideas from others.
Half of the ecosystem wouldn't exist if people were scared of litigation and/or not copying code/ideas from others.
Most of the ecosystem has been open source thus far.
Almost everything in crypto is MIT licensed. This is an interesting experiment in licensing.
more like 98% lol
So is this effectively a company that relies on a permissionless platform adopting a permissioned license?
I thought permissionless was the ethos in the blockchain ecosystem
I thought permissionless was the ethos in the blockchain ecosystem
Right, it's a very strong stand to take in the space. I suspect most Uniswap users won't care, the code is still fully auditable under the BSL.
Given the entire Sushi saga, I'm wouldn't be surprised if there was pressure from big UNI holders (read: VCs) for a move like this, but I'm curious to see if there is any community fallout.
Given the entire Sushi saga, I'm wouldn't be surprised if there was pressure from big UNI holders (read: VCs) for a move like this, but I'm curious to see if there is any community fallout.
Agreed, do the core developers leave the project is the big one I was thinking about. This has happened (for other reasons) to other projects and it effectively makes them dead or dying
Just becuase we cannot express this kind of permission in the platform doesn't make the platform permissionless.
Blockchains are built on permissions - at the heart is the asymmetric key cryptography, giving permissions to smart contacts, tokens that grant permissions, etc.
Blockchains are built on permissions - at the heart is the asymmetric key cryptography, giving permissions to smart contacts, tokens that grant permissions, etc.
I think you are misunderstanding the connection to how the blockchain community defines "permissionless blockchain"
It's about who can participate, build with, and make money with blockchain tech.
The BSL is a permissioned license in that it grants different rights based on who you are and essentially wants to prevent you from making money
It's about who can participate, build with, and make money with blockchain tech.
The BSL is a permissioned license in that it grants different rights based on who you are and essentially wants to prevent you from making money
Very excited to see the move to L2. With the amount of transactions Uniswap produces, this will cut down on Ethereum fees by a good bit.
L2 really has nothing to do with Uniswap V2 vs. V3. As long as the L2 protocol is byte code compatible with the EVM, any contract that runs on main net can be ported to L2.
It kinda does since there was no plan to move to L2 during Uniswap V2.
Presumably Sushi or some other fork will take this route if Uni doesn't.
>Capital efficiency paves the way for low-slippage trade execution that can surpass both centralized exchanges and stablecoin-focused AMMs
I'm skeptical of this. There was a story a few days ago[1] pointing out that AMM like these are vulnerable to getting front-runned, since there's a gap between when you broadcast your transaction and when it gets confirmed by the network. Other traders (especially with cooperation with miners) can exploit this to front-run your trades. Is this fixed in V3?
[1] https://news.ycombinator.com/item?id=26514624
I'm skeptical of this. There was a story a few days ago[1] pointing out that AMM like these are vulnerable to getting front-runned, since there's a gap between when you broadcast your transaction and when it gets confirmed by the network. Other traders (especially with cooperation with miners) can exploit this to front-run your trades. Is this fixed in V3?
[1] https://news.ycombinator.com/item?id=26514624
The README links the following attack[0].
Uniswap v2 has a minimum ratio that rolls back the swap if the price has changed too much against your favour. For the most part this prevents front running trades.
[0]: https://medium.com/coinmonks/demystify-the-dark-forest-on-et...
Uniswap v2 has a minimum ratio that rolls back the swap if the price has changed too much against your favour. For the most part this prevents front running trades.
[0]: https://medium.com/coinmonks/demystify-the-dark-forest-on-et...
Uniswap is the biggest current threat to Coinbase.
Uniswap was trading more than Coinbase Pro during certain periods of 2020.
Uniswap was trading more than Coinbase Pro during certain periods of 2020.
Money has to enter and exit the system somewhere.
Exactly. As long as people have the need to pay in regular currencies, decentralized exchanges aren't an alternative to Coinbase, Kraken, etc.
Honestly this is something that somebody like fidelity/other banks are going to solve and push coinbase out.
A friend is going through the following scenario (and reached out to me for help): they have over half a million dollars sitting in a coinbase account, but coinbase has lost the link between their coinbase account and their bank account.
What this means is that they can't get their substantial amount of money off of coinbase and into their bank.
In some banks, if you have that amount of money, you have a 24/7 number you can call where somebody will greet you by name and solve whatever problem you have immediately.
On coinbase: post on reddit, annoy them on twitter, and try to navigate their knowledge base until you get an answer.
Completely terrifying IMO.
Here's my actual prediction: something that I think still includes coinbase in the process:
Coinbase just becomes coinbase custody. My bank account now has a "cryptocurrencies" tab, with deposit and withdraw addresses. This all happened with debit cards, and it's going to happen with cryptos now as well. I'm still bullish on coinbase, but coinbase becomes visa. I never interact with them directly.
A friend is going through the following scenario (and reached out to me for help): they have over half a million dollars sitting in a coinbase account, but coinbase has lost the link between their coinbase account and their bank account.
What this means is that they can't get their substantial amount of money off of coinbase and into their bank.
In some banks, if you have that amount of money, you have a 24/7 number you can call where somebody will greet you by name and solve whatever problem you have immediately.
On coinbase: post on reddit, annoy them on twitter, and try to navigate their knowledge base until you get an answer.
Completely terrifying IMO.
Here's my actual prediction: something that I think still includes coinbase in the process:
Coinbase just becomes coinbase custody. My bank account now has a "cryptocurrencies" tab, with deposit and withdraw addresses. This all happened with debit cards, and it's going to happen with cryptos now as well. I'm still bullish on coinbase, but coinbase becomes visa. I never interact with them directly.
Yeah with DEXs and more traditional banks starting to offer crypto on/off ramps don't see coinbase being that essential anymore.
Most of these banks are going to be using 3rd party custody services from organizations with expertise in managing crypto assets. Coinbase happens to be one of the most experienced and reputable in this space. It's likely 3rd parties will white label Coinbase Custody rather than build their own crypto department.
What is even more insane than the insanity you describe is that it's not an oversight, Coinbase has actually made that their quasi-official policy: support is provided when you irritate them sufficiently through social channels in their ambient awareness They have literally externalized the support channel of your friend getting her half a million dollars to fucking Reddit. [Insert gif of house on fire + "This is fine" dog.]
Can't they just link a different, or the same bank account to Coinbase through the UI instead of waiting for support to respond?
Alternatively, open an account at a different exchange (e.g. Kraken or Bittrex), then transfer the crypto and sell/withdraw fiat from there?
Obviously not defending Coinbase's absurdly bad customer service, just trying to offer a potentially quicker solution.
Alternatively, open an account at a different exchange (e.g. Kraken or Bittrex), then transfer the crypto and sell/withdraw fiat from there?
Obviously not defending Coinbase's absurdly bad customer service, just trying to offer a potentially quicker solution.
They tried. When you add another account, it never becomes an option to actually withdraw the money. So you go to withdraw, and there are no options there. Click "add bank account" again, and it will appear to add it, but never become an option for withdrawals. Eventually, the message of "you have exceeded the number of times you can try to add a bank account. Please try again in 24 hours" appeared.
Seriously this has flabbergasted me and I don't know that I can continue recommending coinbase to people after seeing this. It is an unbelievable kafkaesque nightmare where you have half a million f*cking dollars that you are trying to withdraw from an institution that purports to be a type of bank...and the robot just can't do it. It's not that you're trying to do something weird, but there is just some bug preventing you from withdrawing your own money, with no real way to actually even report the bug.
It legitimately feels like a type of cyberpunk nightmare. You can see the money, it's yours, but you can't have it, and there isn't even a person you can talk to to help you. Don't worry, funds are safe. They're yours. You just can't have them. Oh and also btw: you owe taxes on them lol. Good luck!
Seriously this has flabbergasted me and I don't know that I can continue recommending coinbase to people after seeing this. It is an unbelievable kafkaesque nightmare where you have half a million f*cking dollars that you are trying to withdraw from an institution that purports to be a type of bank...and the robot just can't do it. It's not that you're trying to do something weird, but there is just some bug preventing you from withdrawing your own money, with no real way to actually even report the bug.
It legitimately feels like a type of cyberpunk nightmare. You can see the money, it's yours, but you can't have it, and there isn't even a person you can talk to to help you. Don't worry, funds are safe. They're yours. You just can't have them. Oh and also btw: you owe taxes on them lol. Good luck!
tl;dr basically your friend never even emailed them about it and lets you run around "completely terrified" and "flabbergasted" because everyone is so uninspired to fix it.
mmmk
mmmk
My friend did email them. A “specialist” was assigned 2 days ago. But there is high support request volume, you see.
Not sure why you'd post a pointlessly inflammatory comment like this. Coinbase is well known for failing to respond to support inquiries for weeks or months.
It's just that OP's comment makes no sense. Losing a bank link somehow still leaves you about a dozen options that don't involve waiting on coinbase support. If I had half a million in cash stuck on coinbase/unable to ACH home I'd withdraw to ETH/DAI within 10 minutes.
If the goal is to withdraw to fiat, and Coinbase is your only fiat ramp, I don't see how withdrawing to an ETH wallet helps.
And then do what with it? Do you think most people selling land in northern Minnesota accept “dai” as payment?
and then you use a different exchange.
Square’s cash app accepts Bitcoin deposits
Kraken exists
Gemini exists
And if you were moving larger amounts there are dozens of OTC desks, some of which are operated by the above companies including Coinbase.
The point of them mentioning Dai is to have stable value long enough to figure out what the next move is
Square’s cash app accepts Bitcoin deposits
Kraken exists
Gemini exists
And if you were moving larger amounts there are dozens of OTC desks, some of which are operated by the above companies including Coinbase.
The point of them mentioning Dai is to have stable value long enough to figure out what the next move is
Wow, that's just bizarre.
There's still my second option though, open a Kraken account and transfer the crypto there.
Do your own research as always, but Kraken has been around since 2011 and has a solid reputation -- I've never heard of anyone losing their funds.
It's not as slick as Coinbase, and used to have a well-deserved reputation for somewhat frequent outages (rare nowadays). Additionally you'll have to pay for a wire transfer to withdraw fiat ($5 to Kraken, plus whatever to the receiving bank). Presumably, in this case none of these would be a serious concern. In the plus column, their customer support is quick to respond and actually helpful, unfortunately a rarity in the crypto world.
There's still my second option though, open a Kraken account and transfer the crypto there.
Do your own research as always, but Kraken has been around since 2011 and has a solid reputation -- I've never heard of anyone losing their funds.
It's not as slick as Coinbase, and used to have a well-deserved reputation for somewhat frequent outages (rare nowadays). Additionally you'll have to pay for a wire transfer to withdraw fiat ($5 to Kraken, plus whatever to the receiving bank). Presumably, in this case none of these would be a serious concern. In the plus column, their customer support is quick to respond and actually helpful, unfortunately a rarity in the crypto world.
Why not just withdraw to an Ethereum wallet and either leave it there (in stable coins or whatever) or again, as OP suggested take the route: Coinbase -> ETH Wallet -> Other exchange?
Max fees would be like $50 for such a transaction.
Max fees would be like $50 for such a transaction.
For now.
Likely in this order:
Entering:
1) Power companies
Entering & exiting:
2) Off-market large trades (sometimes brokered through retail OTC trading desks)
3) Retail outlets such as Coinbase
Entering:
1) Power companies
Entering & exiting:
2) Off-market large trades (sometimes brokered through retail OTC trading desks)
3) Retail outlets such as Coinbase
Coinbase has effectively become a USD / USDC wrapper and unwrapper for me. Most of my trading has moved to dexes.
That's interesting, I feel like the fees I pay on coinbase pro are magnitude smaller than the ones I've paid with dexes with much lower slippage as well.
I'm curious which dexes do you use? Any aggregators?
I'm curious which dexes do you use? Any aggregators?
I predict this winds up as a giant gift to the arbitrage bots.
Right now, the only real way to front run is to take liquidity ahead of a large order. Since swapping costs fees, this restricts front running to trades larger than 0.3% of the liquidity in the pair.
In V3, it will now be possible for liquidity providers to “jump the queue”, by adding liquidity in a narrow range. If an arbitrage bot is monitoring the pending block, it’ll be able to predict exactly how much the price will move on the next block. It can then add liquidity at exactly that range, collect the lion shares of the LP rewards, then instantly remove the liquidity at the end of the block. The only remaining hurdle is the gas cost to add->remove liquidity (which on L2 will be virtually zero).
I really hope they beta test this, because it could potentially be disastrous. Right now, front running really only costs money from large traders. Liquidity providers actually benefit from collecting fees on the extra swaps. But this has the potential to destroy the incentives to LPs, and drain all the liquidity out of the market.
Right now, the only real way to front run is to take liquidity ahead of a large order. Since swapping costs fees, this restricts front running to trades larger than 0.3% of the liquidity in the pair.
In V3, it will now be possible for liquidity providers to “jump the queue”, by adding liquidity in a narrow range. If an arbitrage bot is monitoring the pending block, it’ll be able to predict exactly how much the price will move on the next block. It can then add liquidity at exactly that range, collect the lion shares of the LP rewards, then instantly remove the liquidity at the end of the block. The only remaining hurdle is the gas cost to add->remove liquidity (which on L2 will be virtually zero).
I really hope they beta test this, because it could potentially be disastrous. Right now, front running really only costs money from large traders. Liquidity providers actually benefit from collecting fees on the extra swaps. But this has the potential to destroy the incentives to LPs, and drain all the liquidity out of the market.
Can't these narrow ranges be misused by miners who can decide which transactions they want to put in the next block? I think it would make sense for them to start looking at the contracts themselves, not just the gas fees, and take part of providing liquidity. Even ordering the transactions matter a lot, as they could find arbitrage opportunities.
Yes, but this is solved by PoS.
Also, there's https://libsubmarine.org/
Also, there's https://libsubmarine.org/
>Yes, but this is solved by PoS.
How so? Now rather than colluding with miners and/or mining pools they'll collude with stakers and/or staking pools.
How so? Now rather than colluding with miners and/or mining pools they'll collude with stakers and/or staking pools.
Moving to Optimism L2 will remove miner advantage.
Edit: of course, Optimism "Chain Organizers" can front-run, but if they will be run by Uniswap themselves, then they have no incentive to ruin their own product.
Edit: of course, Optimism "Chain Organizers" can front-run, but if they will be run by Uniswap themselves, then they have no incentive to ruin their own product.
[deleted]
This is a misunderstanding. You don't need to be a miner to front-run transactions. You simply need to run a full node, with visibility into the P2P network.
It's true that miners always have "right of first refusal", in that whoever mines the block can choose to prioritize his own transactions over anyone else. But if miners don't exercise that option, then any third party can front-run the target by outbidding them. Getting rid of miners, does not in anyway remove the issue of front-running. Currently, less than 5% of front-running activity is performed by miners.
As long as transactions are propagated over a P2P network, then front running is still possible. So Optimism only fixes this problem, if Uniswap LLC is hosting the entire side chain and participants are directly submitting their transactions to Uniswap's servers instead of the block chain. However if that's the case, then they almost certainly will be legally obligated to perform KYC/AML on all clients, at which point they are essentially a centralized exchange.
For reference, even Binance Smart Chain, which is heavily criticized for being a centralized exchange in disguise, does not take this approach. Centralize validators are used, but the network itself is still P2P instead of centrally hosted.
It's true that miners always have "right of first refusal", in that whoever mines the block can choose to prioritize his own transactions over anyone else. But if miners don't exercise that option, then any third party can front-run the target by outbidding them. Getting rid of miners, does not in anyway remove the issue of front-running. Currently, less than 5% of front-running activity is performed by miners.
As long as transactions are propagated over a P2P network, then front running is still possible. So Optimism only fixes this problem, if Uniswap LLC is hosting the entire side chain and participants are directly submitting their transactions to Uniswap's servers instead of the block chain. However if that's the case, then they almost certainly will be legally obligated to perform KYC/AML on all clients, at which point they are essentially a centralized exchange.
For reference, even Binance Smart Chain, which is heavily criticized for being a centralized exchange in disguise, does not take this approach. Centralize validators are used, but the network itself is still P2P instead of centrally hosted.
There's a lot of semi-incorrect information here.
With Optimism, there can be multiple L2 chains, by different "Chain Organizers". When you submit a transaction, you get a receipt from Organizer, a cryptographic promise that it will be included in future rollup.
It means only Organizers can attempt to front-run, by adding a transaction before giving out your receipt. And users can always choose to use different Organizers, those that don't front-run. Since Organizers gain a small amount of fees, it doesn't make sense to be a bad, front-running Organizer.
With Optimism, there can be multiple L2 chains, by different "Chain Organizers". When you submit a transaction, you get a receipt from Organizer, a cryptographic promise that it will be included in future rollup.
It means only Organizers can attempt to front-run, by adding a transaction before giving out your receipt. And users can always choose to use different Organizers, those that don't front-run. Since Organizers gain a small amount of fees, it doesn't make sense to be a bad, front-running Organizer.
I spent quite a lot of time developing Uniswap/Sushiswap/other dex arbitrage (back/front/sandwich) tools and bots over the last 6 months.
When you say you simply need to run a full node, thats incorrect. It is a prerequisite yes, but much less than half the battle. You also need now to ensure correct order placement (on any opportunity there are upwards of 5-15 competing bots), a friendly relay network/mining pools, efficiently node peering (e.g. 2-400 peers per node, managed on a custom routing table), a network of nodes to broadcast/listen for mem pool messages across the entire network instantaneously without waiting for P2P propagation (1-2 hops may introduce enough latency to lose out on the arb) (& some nodes are malicious - who fail to propagate arb'ble tx's), patched/custom GETH instances running on nodes (I am not at liberty to reveal what optimizations make one competitive). And then above all of that you need to be able to absorb, identify profitable transactions and then compute/simulate optimal transaction parameters in a very constrained amount of time.
So its not at all simple, in fact I have wound down most of my operations as the costs vs. rewards are extremely marginal now vs. what they were mid last year.
When you say you simply need to run a full node, thats incorrect. It is a prerequisite yes, but much less than half the battle. You also need now to ensure correct order placement (on any opportunity there are upwards of 5-15 competing bots), a friendly relay network/mining pools, efficiently node peering (e.g. 2-400 peers per node, managed on a custom routing table), a network of nodes to broadcast/listen for mem pool messages across the entire network instantaneously without waiting for P2P propagation (1-2 hops may introduce enough latency to lose out on the arb) (& some nodes are malicious - who fail to propagate arb'ble tx's), patched/custom GETH instances running on nodes (I am not at liberty to reveal what optimizations make one competitive). And then above all of that you need to be able to absorb, identify profitable transactions and then compute/simulate optimal transaction parameters in a very constrained amount of time.
So its not at all simple, in fact I have wound down most of my operations as the costs vs. rewards are extremely marginal now vs. what they were mid last year.
> Currently, less than 5% of front-running activity is performed by miners.
How do we know this number? It seems like it would be possible for miners to front run without any identifying characteristics.
How do we know this number? It seems like it would be possible for miners to front run without any identifying characteristics.
Is it really draining the liquidity or switching it to flash liquidity instead?
That would make the estimates worse though.
That would make the estimates worse though.
Can't crypto kill front running entirely?
Alice, wanting to transact, writes down two opposing orders, say buy 1 share of A for $10 and sell 1 share of A $10, plus a signed secret stating which order it actually is.
Other players subscribe to one of the two opposite orders.
Next thing (whatever that means in these blockchains, but after other players have subscribed to one of the two opposite orders), Alice reveals the secret using her private key. This reveals which order it was (buy or sell). Alice then makes a deal automatically with whoever subscribed to that order. The other opposite order is cancelled.
Alice, wanting to transact, writes down two opposing orders, say buy 1 share of A for $10 and sell 1 share of A $10, plus a signed secret stating which order it actually is.
Other players subscribe to one of the two opposite orders.
Next thing (whatever that means in these blockchains, but after other players have subscribed to one of the two opposite orders), Alice reveals the secret using her private key. This reveals which order it was (buy or sell). Alice then makes a deal automatically with whoever subscribed to that order. The other opposite order is cancelled.
Bots can probably still front run arbitrage opportunities where it's clear which transaction is the correct one, but the same can probably be done by encrypting the whole transaction and only specifying the wallets involved.
This has been proposed quite a few times, but the problem comes down to that it requires letting a single participant "lock down" the entire liquidity pair.
For the above scheme to work, Alice's reveal would have to occur at a later block than her initial commit. Otherwise an arbitrage bot could simply peek at the reveal before the commit is mined. Also Alice's commit has to lock the chain until its reveal. Otherwise when her reveal is propagated on the P2P network, the arbitrage bot could jump the queue in front of her commit and still exploit her.
You're now talking about the market freezing for 12-seconds (the block time) on every single trade. That's completely infeasible for any sort of liquid pair like ETH/USDT. Not to mention a single malicious player could DDoS the entire market. Or use it as a free option during periods of high volatility: lock the market then "reveal" in whatever direction the centralized exchanges moved in the lock-up period.
Maybe you could only lock "big trades", but that in itself reveals a lot of information. You don't necessarily know the direction, but you can likely infer it with high certainty. For example if Alice doesn't own much of a token, then it's nearly certain she's buying not selling.
For the above scheme to work, Alice's reveal would have to occur at a later block than her initial commit. Otherwise an arbitrage bot could simply peek at the reveal before the commit is mined. Also Alice's commit has to lock the chain until its reveal. Otherwise when her reveal is propagated on the P2P network, the arbitrage bot could jump the queue in front of her commit and still exploit her.
You're now talking about the market freezing for 12-seconds (the block time) on every single trade. That's completely infeasible for any sort of liquid pair like ETH/USDT. Not to mention a single malicious player could DDoS the entire market. Or use it as a free option during periods of high volatility: lock the market then "reveal" in whatever direction the centralized exchanges moved in the lock-up period.
Maybe you could only lock "big trades", but that in itself reveals a lot of information. You don't necessarily know the direction, but you can likely infer it with high certainty. For example if Alice doesn't own much of a token, then it's nearly certain she's buying not selling.
Front running cannot happen if the mempool is encrypted. These types of blockchains are current being explored but have tradeoffs are are not widely adopted. Here are two example blockchains:
SCRT (Hardware TEE, functional on Cosmos)
Partisia (MPC, no working product)
Other theoretical methods include homomorphic encryption and indistinguishable obfuscation.
SCRT (Hardware TEE, functional on Cosmos)
Partisia (MPC, no working product)
Other theoretical methods include homomorphic encryption and indistinguishable obfuscation.
What do you mean by "take liquidity ahead of a large order" and "adding liquidity in a narrow range"?
When a user creates a swap transaction on Uniswap, it goes into the ETH transaction queue (prioritized by gas amount). If a bot notices that a user has a large swap (say swapping $1.5M USDC for 1K ETH), a bot could theoretically 'front-run' the order (by paying a higher gas fee than the original swap) and inject say, $10M of liquidity into the expected price-band of movement caused by the trade. They could then pocket a portion of the transaction fees (whatever their fraction of the 0.3% trade fee that Uniswap charges is), and then immediately pull the liquidity out of the LP to then wait for another front-running opportunity.
This doesn't harm the person doing the swap, per se. It harms the Liquidity Providers that hold their capital in the pool for longer term.
This doesn't harm the person doing the swap, per se. It harms the Liquidity Providers that hold their capital in the pool for longer term.
Would it help if Uniswap implemented a cooldown on adding/removing liquidity?
It seems to me that the opportunities you are describing will be rare. If we classify liquidity providers into static and dynamic, under an efficient market it should be expected that the static liquidity providers will over time distribute their funds efficiently along the curve. The event you describe will only occur if volatility is greater than expected and the dynamic liquidity provider has a large share.
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Still think pangolin on the avalanche network is a much better dapp than uniswap can ever be in PoW ethereum.
Links please
Pangolin is basically a uni fork, on a different network.
Uni v3 on L2 solves some of the gas issues seen on L1.
Uni v3 on L2 solves some of the gas issues seen on L1.
https://polkaswap.io my friend, launches end of March :)
What's really interesting to me is that all these advancements could have been made by a centralized service for stock trading as well if the debt based system and T+3 days margin calls wouldn't be a requirement.
DTCC owns most US stocks, so I don't see why they wouldn't be able to launch uniswap style contracts to allow better use of liquidity instead of just having simple limit order contracts.
DTCC owns most US stocks, so I don't see why they wouldn't be able to launch uniswap style contracts to allow better use of liquidity instead of just having simple limit order contracts.
>What's really interesting to me is that all these advancements could have been made by a centralized service for stock trading as well
uhh, what? The two features that were introduced were "Concentrated liquidity" and "Multiple fee tiers". I'm not sure how either of them are applicable to centralized exchanges.
>and T+3 days margin calls wouldn't be a requirement.
https://news.ycombinator.com/item?id=26007414
uhh, what? The two features that were introduced were "Concentrated liquidity" and "Multiple fee tiers". I'm not sure how either of them are applicable to centralized exchanges.
>and T+3 days margin calls wouldn't be a requirement.
https://news.ycombinator.com/item?id=26007414
Concentrated liquidity is needed because of the huge cash requirement right now (as the link that you provide writes about it). Having guaranteed execution with real time clearing, real cash and smarter contracts is a sounder system than stupid contracts and margin trading with slow clearing.
Is anyone building this for the traditional finance system, with actual shares as collateral? I know of Mirror Protocol & FTX, but they are just p2p swaps/futures. My email is in my profile if anyone wants to discuss further.
Good luck, it would be great!
It was interesting seeing WeBull's CEO talk about how bad is DTCC for them, and how strong monopoly it has, but still he wasn't doing anything about it. The opportunity is huge, but I guess that means that the execution is very hard.
It was interesting seeing WeBull's CEO talk about how bad is DTCC for them, and how strong monopoly it has, but still he wasn't doing anything about it. The opportunity is huge, but I guess that means that the execution is very hard.
Uniswap is one of the most useful and interesting projects in blockchain. Interested to hear why blockchain skeptics on HN think this project is totally worthless (as they claim everything in crypto is) given how much they have accomplished and how much value is traded on Uniswap every day.
Huge proof and validation that blockchain / crypto is developing into something extremely useful.
Here is a top-thread on HN from 7 months ago (before latest bull run) about how Blockchain is totally worthless, and my responses. Look at the hate! HN is absurd https://news.ycombinator.com/item?id=24182334
Huge proof and validation that blockchain / crypto is developing into something extremely useful.
Here is a top-thread on HN from 7 months ago (before latest bull run) about how Blockchain is totally worthless, and my responses. Look at the hate! HN is absurd https://news.ycombinator.com/item?id=24182334
There has been amazing technical progress in DEXex/AMMs but ultimately they're used for 100% gambling.
While that might be the case currently, the capital efficency of DeFi is miles ahead of any traditional system.
Not totally true, one can use them to yield farm. (*which I concede is gambling on credit risk, but only tangently)
From a cynical perspective that's true of any market.
there's nothing cynical about that, it is purely cultural for people to create a distinction that requires gambling and speculation being something lesser than other activities
all markets function this way and it drives innovation and service providers. people choose not to respect crypto, while working for an ad retargeting conglomerate to pat themselves on the back saying "at least I'm doing something useful with my life", and thats all there is to it.
all markets function this way and it drives innovation and service providers. people choose not to respect crypto, while working for an ad retargeting conglomerate to pat themselves on the back saying "at least I'm doing something useful with my life", and thats all there is to it.
I'm going to play devils advocate here, but I don't think the value traded on Uniswap really proves blockchain or crypto is 'useful'. We need use cases outside of DeFi to have any chance of getting HN to accept blockchain isn't a waste of time.
ENS and NFTs are what come to mind.
Finance is a multi hundred trillion dollar industry. Whether you like it or not, money makes the world go 'round. If all blockchain ever did was disrupt traditional finance (as it is currently doing), it would have firmly established itself as a useful technology.
Software is eating the world. DeFi is eating traditional finance.
Software is eating the world. DeFi is eating traditional finance.
Where is @JumpCrisscross to give us the ex-money wizard take on these new financial innovations :)
Some highlights that stood out:
- Range positioning for your capital. In the sweet spot, there is higher fee returns but higher impermanent loss (IL).
- Range orders are possible. If the price goes out of range, it is effectively a limit order (but you need to remove liquidity before price comes back within range)
- LP tokens will be NFTs instead of ERC20s. This will likely affect the way liquidity mining is done currently, or they'll move to Sushi/remain on Uni v2.
- Moving to optimism L2 in the future. This would lower gas for all DApps on Ethereum.
- More fee options for LPs
- Hint of protocol fees for UNI holders
- Business source license perhaps to disincentivize copies like Sushi
Overall, this seems like a fairly substantial change. It will probably take time for the ecosystem around this to mature. Excited for the long-term implications of this update.
- Range positioning for your capital. In the sweet spot, there is higher fee returns but higher impermanent loss (IL).
- Range orders are possible. If the price goes out of range, it is effectively a limit order (but you need to remove liquidity before price comes back within range)
- LP tokens will be NFTs instead of ERC20s. This will likely affect the way liquidity mining is done currently, or they'll move to Sushi/remain on Uni v2.
- Moving to optimism L2 in the future. This would lower gas for all DApps on Ethereum.
- More fee options for LPs
- Hint of protocol fees for UNI holders
- Business source license perhaps to disincentivize copies like Sushi
Overall, this seems like a fairly substantial change. It will probably take time for the ecosystem around this to mature. Excited for the long-term implications of this update.
Overall, good summary. Small nitpick:
- "This would lower gas for all DApps on Ethereum" not really, the same amount of gas will still be used by other applications. However, the average gas _price_ will probably go down, as current Uniswap usage raises the gas price as people try to get their transactions executed faster.
- "This would lower gas for all DApps on Ethereum" not really, the same amount of gas will still be used by other applications. However, the average gas _price_ will probably go down, as current Uniswap usage raises the gas price as people try to get their transactions executed faster.
Is a token going to have to choose between listing on Uniswap 3 and Uniswap 2? Is there any advantage for LP to list on Uniswap 2 in terms of being "first" on a platform, as there is for building on iOS or Facebook or soemthing?
>Is a token going to have to choose between listing on Uniswap 3 and Uniswap 2?
No. There be separate liquidity pools.
>Is there any advantage for LP to list on Uniswap 2 in terms of being "first" on a platform
There is no inherent advantage to being first. As soon as volume picks up, the other liquidity providers pile on and get their cut of it.
No. There be separate liquidity pools.
>Is there any advantage for LP to list on Uniswap 2 in terms of being "first" on a platform
There is no inherent advantage to being first. As soon as volume picks up, the other liquidity providers pile on and get their cut of it.
I skimmed through the article and don't even have the faintest idea what this is about.
I work in the blockchain space and still don't know most of these DeFi terms, it's a whole world of its own.
What is effectively a changelog of features for their new version is probably not the best place to start.
If you'd like to know more then this [0] is a brief summary of Uniswap and this paper [1] is a good introduction to the formalism of the `x * y = k` market making model used by Uniswap.
[0]: https://github.com/runtimeverification/verified-smart-contra...
[q]: https://github.com/runtimeverification/verified-smart-contra...
If you'd like to know more then this [0] is a brief summary of Uniswap and this paper [1] is a good introduction to the formalism of the `x * y = k` market making model used by Uniswap.
[0]: https://github.com/runtimeverification/verified-smart-contra...
[q]: https://github.com/runtimeverification/verified-smart-contra...
For those who aren't familiar, this post is referring to a decentralised trading system running on the Ethereum blockchain.
The acronym "LP" refers to Liquidity Provider, which is anyone who locks up liquidity for two different assets to facilitate a trade.
The acronym "LP" refers to Liquidity Provider, which is anyone who locks up liquidity for two different assets to facilitate a trade.
> Instead, LP positions will be represented by non-fungible tokens (NFTs). However, common shared positions can be made fungible (ERC20) via peripheral contracts or through other partner protocols. Additionally, trading fees are no longer automatically reinvested back into the pool on LPs’ behalf.
On the face of it this seems like a gas tradeoff for the liquidity range feature. It seems to me that this will promote an ecosystem of management platforms and further aggregation of funds by proxy as long as L1 fees remain high.
On the face of it this seems like a gas tradeoff for the liquidity range feature. It seems to me that this will promote an ecosystem of management platforms and further aggregation of funds by proxy as long as L1 fees remain high.
The LPs being represented as NFTs isn't a gas thing. There's no other way to represent your position since there are now infinite positions to take (since your range is completely customizable), they have to be represented as NFTs and not ERC20s.
But the ecosystem of management platforms is correct. It's likely that protocols like Yearn will create managed liquidity pools that hold a collection of "NFLT" positions to represent a particular strategy.
But the ecosystem of management platforms is correct. It's likely that protocols like Yearn will create managed liquidity pools that hold a collection of "NFLT" positions to represent a particular strategy.
Of course, that's the only valid representation but it makes me wonder about their claims of gas efficiency and how they compared it.
Yeah they said there was marginal gas improvements on L1, but not sure how. Haven't read the source code yet.
> LP positions will be represented by non-fungible tokens (NFTs). However, common shared positions can be made fungible (ERC20) via peripheral contracts or through other partner protocols.
This is wild, this is the biggest thing to be excited about, in my opinion!
Farming is about to get crazy! errr, crazier!
I never really understood NFT farming, or whether using NFT's to get other things or staking to earn NFTs, but with this I will.
This is wild, this is the biggest thing to be excited about, in my opinion!
Farming is about to get crazy! errr, crazier!
I never really understood NFT farming, or whether using NFT's to get other things or staking to earn NFTs, but with this I will.