The long-awaited layer two scaling solutions update for Uniswap has been launched with the introduction of Uniswap’s Optimistic Ethereum layer 2 solution.
An enthusiastic blog post appeared on July 13 announcing the alpha launch of Uniswap v3 on the Optimistic Ethereum (OΞ) mainnet.
Optimism is a project that uses the so-called Optimistic Rollup technique to improve the Ethereum blockchain’s scalability.
A New Way to Scale
The technique, which is essentially a process of “rolling up” transactions and putting them into a single block, is anticipated to substantially improve network throughput, resulting in quicker transaction confirmation times and reduced transaction costs.
The blog post details the announcement:
Today’s launch marks the first step in the journey for DeFi applications to rival and surpass traditional web user experiences. Optimism’s roadmap promises further powerful improvements including additional scaling, smart wallet EOAs (no ”approves”, pay gas in any token), and decentralization of the transaction sequencing operation.
During this Alpha period, OΞ will support an initial throughput of 0.6 transactions per second. Because Uniswap v3 is currently one of the few protocols deployed to OΞ, this should translate to transaction capacity roughly in line with L1. Unlike L1, transactions on OΞ confirm instantly — no more pending or stuck swaps!
Assuming Uniswap v3 sees equal usage to L1, OΞ should offer up to 10x transaction cost savings. Additional demand will drive gas costs higher — for more details, check out Optimism’s blog post. Transaction speeds will ramp up over the coming weeks and months as the OΞ infrastructure is tested and optimized at scale, with the end goal of scaling to fully meet demand for low cost, high speed DEX trading.
This could be huge for the decentralized exchange, which executes transactions directly on the Ethereum blockchain and is the largest consumer of gas–according to data from ETH Gas Station, Uniswap has spent as much as 1,500 ETH on transaction fees in the last 30 days (roughly $2.9 million at current prices).
The platform’s throughput will be limited to 0.6 transactions per second during the early stage. It stated that, considering layer one and considering transactions that confirm immediately, the total capacity equates to layer one.
Based on Uniswap’s assumption, OΞ should expect to save 10x on transaction costs if L1 use is similar to L3, but rising demand would raise transaction fees. Over the following weeks and months, as the infrastructure is tested and optimized at scale, transaction speeds will be improved.
What is Uniswap?
Uniswap is a cryptocurrency trading exchange that operates on a decentralized basis. The name of the firm that created the Uniswap protocol is also Uniswap. Through the use of smart contracts, the protocol allows for automatic transactions between cryptocurrency tokens on the Ethereum blockchain.
Uniswap was projected to be the biggest decentralized cryptocurrency exchange and the fourth-largest cryptocurrency exchange overall by daily trading volume as of October 2020.
Uniswap was earning fees of about US$2–3 million per day for the liquidity providers that enable liquid markets for the cryptocurrencies being swapped in March 2021.