What's different about the new version of PancakeSwap V3

Leoand others2Authors

2023-04-04 18:50

Read this article in 7 Minutes

AI summary

View the summary

Original author:Ignas, DeFi researcher

Leo, BlockBeats

PancakeSwap has just launched a new version V3, which is also a fork of Uniswap V3. The difference is that the new version focuses on enhanced user experience and ease of use. DeFi researcher Ignas wrote about "New features for PancakeSwap Version V3", BlockBeats compiles as follows:

First, let's review the history of Uni: PancakeSwap V2 was launched in the summer of 2020 DeFi to spice up an already red-hot DeFi market, and soon after many forks emerged, making Uni V2 the most forked DeFi protocol ever, PancakeSwap being one of them.

Forking made sense at a time when Uniswap was unwilling to deploy on any chain other than Ethereum. Due to this "unwillingness" and the high Gas charges of ETH, each layer had a Uni V2 fork. PancakeSwap introduced a forked version of Uni. And quickly became dominant in the BSC chain, with its current TVL of $3.4 billion.

Then came Uniswap V3, which was launched two years ago, but Uniswap previously had a licence against forking, valid until April 1, 2023. Uniswap has brought several improvements to its V3, namely:

- Concentrated liquidity leads to up to 4,000 times greater capital efficiency;

- Multiple fee classes;

Many DeXes are unable to fork Uniswap V3 before their Uni license expires, so they have to innovate to gain a competitive advantage, such as:

-Trader Joe's liquidity books;

- Elastic of KyberSwap;

-Velodrome's ve (3,3) token economy;

-Active market making by Dodo.

PancakeSwap has also added unique features:

- Easy to use binary options

- Spinach on chain

- Via Perps, which is working with ApolloX

- New mining opportunities

- It also improves on CAKE's token economics and uses multi-chain technology.

I think the most interesting PCS upgrade is Market Maker (MM) integration, a feature that offers lower fees and more suitable prices as well as lower TVL without spending the CAKE incentive. But enabling high TVL on Ethereum is not easy, here are some more details about MM integration:

In short: PancakeSwap has always focused on retail investors.

So, I was surprised that PCS V3 is a branch of Uniswap, because V3 is difficult for beginners to use. For example, concentrated liquidity is good for efficiency, but LP needs to actively manage positions.

Thankfully, PCS will soon launch automated position managers that will enable one-click liquid deposits and keep liquidity within limits to easily earn fees and mining incentives.

PCS also improves two other shortcomings of Uniswap V3:

- Automatic APR display, which provides V3 LP real-time APR data based on liquidity, historical volume and position allocation, eliminating the need for third-party tools;

- Improved ROI calculator, enabling V3 LP to estimate yields and volatile losses to easily adjust positions without complex, time-consuming calculations;

Two other useful upgrades are:

- Premium Built-in Limit Order (coming soon), integrate V3, V2, StableSwap or market maker for liquidity;

- Support various transaction fee levels, 0.01%, 0.05%, 0.25%, and 1% respectively, and already supports BSC and Ethereum;

In summary, PancakesSwap V3 deepens the features that PCS has always prided itself on, improving user experience and incentives for retail investors, while benefiting from the capital efficiency of Uni V3.

Finally, will PancakeSwap V3 add colour to DeFi as Uniswap did?