One sword to seal the throat: Uniswap V3 leads AMM to charge CEX

Yesterday morning, we inserted the official announcement of Uniswap V3 at the end of the article. Since everyone has been looking forward to V3 for a long time, the media also followed up yesterday and reported. However, most of the media’s responses were to translate the original text, or that Monk Zhang Er couldn’t touch his head. Many people felt that V3 was quite different from what they had expected before. Of course, the first to bear the brunt is the ticket skipping. The first thing that came out was just an announcement. The official launch of the mainnet will not be until May. The 2nd floor will closely follow the 1st floor, which is in line with expectations. Then the main content is to upgrade. In addition to the TWAP oracle that ordinary users don’t use much, the BSL that users don’t care much about, and the two layers that have been predicted long ago, there are still improvements in liquidity efficiency and layering fees. Rate (still can be seen as a problem related to liquidity efficiency), which makes many people feel a little bit dry.

This is because most people actually did not seriously think about a question, that is, what should Uniswap’s strategic direction be. Obviously, the Uniswap team used actual actions to show that, as the leader of AMM (automated market maker) DEX (decentralized trading), Uniswap needs to lead the development direction of AMM and solve the most important and critical strategic problem of AMM at this stage, that is Completing the AMM model of DEX completely surpasses the order book model of CEX, and finally completely replaces the order book trading system of CEX. This is a huge challenge and a huge historical opportunity. Completing this historic leap is the current stage of the industry. The inevitability of development is also a historical responsibility that Uniswap must shoulder. The main contradiction at the current stage is the contradiction between the history of DEX replacing CEX and the technical bottleneck of the AMM efficiency that cannot fully crush the order book system. This contradiction is difficult to solve, but after all, someone needs to face and solve it directly. In the face of this historical responsibility, Uniswap is obliged.

Before Uniswap, the development of DEX started from imitating order books (such as IDEX), to eclectic market-making strategies using off-chain market makers (such as Tokenlon), to adjusting the curvature of the curve, sacrificing responsiveness in exchange for low slippage (such as curve ), there are even various attempts to use external oracles to hand over the pricing power to CEX. However, as we have seen, all attempts have either proved to be technically infeasible, or self-castration of AMM, and they are unable to undertake the task of challenging the CEX order thinning model.

Uniswap has painstakingly studied the improvement of AMM. From the history of code check-in, it took more than a year and painstakingly. The result is V3. The most important focus of V3 we have seen is to improve the efficiency of liquidity funds and solve the gas problem. These two problems are the most important problems that bother DEX cannot match CEX. After V2 came out in 2020, what the Uniswap team did not expect was that DeFi was hot, bifurcations and Sushi grabbed the spot, which disrupted the rhythm for a while. But then, Uni issued coins to alleviate the problem. The copycat public chain appeared, and the capitulationists were proactively recruited. Is the DEX grown on the CEX public chain still DEX? Can you still carry the revolutionary banner of surpassing CEX? Obviously not. This is doomed to the historical speculative nature of countless local dog projects. All kinds of so-called innovations are dazzling, but playing around is just a big coin mining, overdrawing the financial power of the market to win a moment of joy. Shakespeare said long ago that the violent joy must have a violent ending. The violent ending was that when the market was extremely overdrawn, the music ended and the people fell sharply. Because no one cares about real technological innovation, and no one knows how to carry out real technological innovation.

Only the creator of the AMM road, Uniswap knows everything. Uniswap does not echo the emptiness of prosperity, but concentrates on solving the most important problem: without sacrificing openness or core characteristics, that is, without sacrificing curve responsiveness, and not giving up price discovery capabilities, the capital is greatly increased. Efficient and reduce gas expenditures, allowing DEX to cross important barriers and have the ability to fully surpass the CEX order book. As for the creation and invention of other peripheral tools, UGP (Uniswap Grants Program) can be used to promote the community and promote the ecology. This is a good ecology. This is the focused strategy. Strategy is never about doing as much as possible. It is not about what to do, but more importantly, what not to do. The core of strategic issues is focus issues. Know what the most critical issue should be focused on, and seal the throat with one sword!

Let history and facts test everything. Let us wait and see.