Key Takeaways:
- Decentralized exchanges (DEX) Uniswap plans to launch its much-awaited V4 version
- However, the launch will come only after Ethereum (ETH) completes its Cancun upgrade
- According to reports, the ETH Cancun upgrade is due at the end of September
YEREVAN (CoinChapter.com) — Uniswap (UNI), one of the leading decentralized exchanges (DEX), eagerly awaits the implementation of the Cancun-Deneb (Dencun) upgrade on the Ethereum (ETH) blockchain to launch its highly anticipated version 4 (V4).
Uniswap V4 aims to enhance user experience, provide advanced features, and address existing limitations. However, according to Erin Koen, head of the Governance Lead at the Uniswap Foundation, its successful launch hinges on the timely deployment of the Cancun upgrade.
The current version of Uniswap, V3, has gained significant popularity. It offered unique features such as concentrated liquidity and the ability to provide greater capital efficiency for liquidity providers. It also focused on maximizing capital efficiency compared to the previous V2 version.
Nevertheless, the Uniswap team envisions even more powerful capabilities with the upcoming V4 release.
Besides, after the completion of the Cancun upgrade, another crucial step in the process is to conduct a thorough security audit. This stage holds significant importance as it serves to evaluate and ensure the robustness and security of the new protocol.
According to The Block, which cited Koen, Uniswap will not rush through the audit to ensure that the integrity and security of its ecosystem are not compromised.
Uniswap v4 a massive upgrade
The launch of Uniswap v4 will come as a huge upgrade to the largest decentralized exchange protocol for Ethereum. It boasts of a total value locked (TVL) of around $4 billion, according to DefiLlama.
Uniswap v4’s draft code went live on June 13, ushering in a new era for the DEx protocol. This transition is centered around the implementation of “hooks,” which are smart contracts that allow customization of how pools, swaps, fees, and LP positions interact in Uniswap v4. These include options for fees, on-chain limit orders, and personalized on-chain oracles.
“Uniswap v4’s architecture reduces costs and ensures efficiency. It introduces a new “singleton” contract, where all pools live within a single smart contract. We believe the combination of hooks and singleton architecture creates an incredibly powerful platform ⸺ fast, safe pool customization and efficient routing across many pools,”
the company announced in a blog post last month.
The upgrade also introduces an innovative “flash accounting” system that aims to reduce fees for liquidity providers. Unlike the v3 model, which involved transferring assets in and out of pools after each swap, the v4 model will only transfer net balances, developers have clarified.
This adjustment ensures a more efficient and streamlined approach to managing liquidity within the protocol.
Since news of the upgrade hit the newsstands, investors have been waiting to see how it will impact the UNI token price. The UNI is the native cryptocurrency of the Uniswap ecosystem.
Last month, after Uniswap v4’s draft code went live, Wintermute Trading accumulated over $4 million worth of UNI tokens.
This development led many to speculate that the upgrade will send the UNI price soaring. At the time of writing, the UNI coin price in the market is around $5.5. This is still significantly down from its all-time high of nearly $50 in May 2021.
Ethereum Cancun upgrade coming in September
The Ethereum Cancun upgrade is due at the end of September 2023. This development comes months after Ethereum (ETH) network completed its Shanghai upgrade earlier this year.
The upcoming upgrade will improve the scalability, security, and usability of the Ethereum network. To achieve this, it will implement several improvements, including the introduction of Proto-Danksharding to the network.
Péter Szilágyi, an Ethereum core developer, has emphasized the significance of Proto-Danksharding, stating that it should be the central focus of the upgrade.
According to the company, Proto-Danksharding serves as an intermediary upgrade aimed at scaling rollups on the Ethereum network. It comes as a crucial step towards enhancing Ethereum’s scalability and transaction speed.
In addition, the Ethereum Cancun upgrade is likely to incorporate several other Ethereum Improvement Proposals (EIPs). These may include EIPs 4758, 6046, and 6190, which involve the removal of the SELFDESTRUCT function, along with EIP-663, which allows for unlimited SWAP and DUP instructions.
The much-awaited upgrade may also introduce other potential features, such as EIP-5920, which relates to the PAY opcode, and EIP-1153, which introduces the concept of transient storage.
Will the Cancun upgrade impact Ethereum (ETH) price?
Ethereum (ETH) remains the second-largest cryptocurrency after Bitcoin (BTC), with a market cap of over $220 billion. At the peak of the crypto rally in late 2021, its price surged significantly to reach an all-time high (ATH) of $4,891. At the time, Bitcoin also peaked at more than $68,000.
But then immediately came the downdraft. Inflation rates went up, creating FUD among investors amid speculations that the Federal Reserve would hike borrowing costs in 2022. As a result, traders drifted away from cryptos to safer, traditional assets.
Bitcoin, Ethereum, and a host of leading tokens tanked, sending the crypto market into an overall slump.
Since January this year, ETH has made slight gains, adding over 50% to its price. However, it remains well below its peak of November 2021.
While writing, ETH exchanges hands at $1,860, according to CoinMarketCap.
Meanwhile, although it is impossible to ascertain, the Cancun upgrade has the potential to serve as a significant catalyst for Ethereum’s price. By improving the scalability, security, and usability of the network, the upgrade may attract a larger user and developer base to the Ethereum ecosystem.
It is typical for network upgrades to reflect positively on the token’s price. Long-term investors will be looking to see if they can regain their losses, while more recent ones will hope to make quick short-term profits.
