Deployment of Uniswap V3 on Filecoin VM and Its Significance

Forward the Original Title：资讯|Uniswap V3 在 Filecoin VM 上的部署及其意义

Uniswap V3 is a decentralized trading protocol that launched on the Ethereum mainnet in May 2023, introducing innovative features such as concentrated liquidity, multiple fee tiers, and custom liquidity ranges aimed at improving trading efficiency and flexibility while reducing transaction costs and slippage. However, due to congestion and high fees on the Ethereum network, Uniswap V3 still faces challenges in scalability and accessibility. To address these issues, the Uniswap V3 team announced on March 1, 2024, that they have successfully deployed Uniswap V3 on the Filecoin VM, a virtual machine based on the Filecoin network capable of running any Ethereum-compatible smart contracts. Through the Filecoin VM, Uniswap V3 can leverage the high-speed, low-cost, and high-capacity storage and computing resources of the Filecoin network to achieve higher throughput and lower latency while maintaining compatibility and security with Ethereum. Additionally, Uniswap V3 has received support from Celer and Axelar, which provide layer 2 scaling and cross-chain bridging solutions, allowing Uniswap V3 to support more cross-chain assets on the Filecoin VM, such as ceWETH, ceUSDC, axIUSDC, axiDAI, expanding Uniswap V3’s market coverage and user base. This article will analyze the deployment of Uniswap V3 on the Filecoin VM and its impact and significance on the decentralized finance (DeFi) ecosystem.

Features and Challenges of Uniswap V3

Uniswap V3 is one of the most popular decentralized trading protocols, which underwent significant upgrades and improvements based on Uniswap V2. It introduced several key features:

• Concentrated Liquidity: Liquidity providers (LPs) can freely set the price range for providing liquidity, instead of providing liquidity for the entire price curve as in Uniswap V2. This allows LPs to concentrate liquidity in price ranges where they believe transactions are most likely to occur, thereby increasing liquidity utilization and profitability while reducing the risk of impermanent loss.
• Multiple Fee Tiers: Uniswap V3 offers three different fee tiers of 0.05%, 0.3%, and 1%, allowing LPs and traders to choose based on different assets and needs. This enables Uniswap V3 to adapt to various market conditions and liquidity demands, providing a more reasonable fee structure for different assets and strategies.
• Customizable Liquidity Range: Uniswap V3 allows LPs and traders to create custom liquidity pools between any two assets, rather than being limited to trading between ETH and other ERC-20 tokens as in Uniswap V2. This supports more asset combinations and trading pairs, increasing trading flexibility and diversity.

These features significantly improve trading efficiency and flexibility in Uniswap V3, providing more choices and optimization opportunities for LPs and traders. However, Uniswap V3 still faces limitations within the Ethereum network, particularly in the following aspects:

• Scalability: Due to the limited throughput of the Ethereum network, Uniswap V3’s transaction speed and scale are limited and cannot meet growing market demand and user expectations. Especially when the market fluctuates violently, the transaction delay and failure rate of Uniswap V3 will increase significantly, affecting the user’s trading experience and effect.
• Availability: Due to the high handling fees of the Ethereum network, the transaction costs of Uniswap V3 are correspondingly high. For small and frequent traders, this will greatly reduce their trading profits and willingness to participate. Especially for LPs who want to take advantage of Uniswap V3’s centralized liquidity and custom liquidity range features, they need to frequently adjust and manage their liquidity positions, which will cause them to pay a large amount of handling fees, offsetting their revenue advantage.

• Compatibility: As Uniswap V3 can only operate on the Ethereum network, it cannot directly support assets and users on other chains, limiting its market coverage and user base. Especially in the current trend of cross-chain interoperability, where more assets and users are distributed across different chains, if Uniswap V3 cannot interoperate with other chains, it will miss out on many trading opportunities and competitiveness.

  .

Therefore, to overcome these challenges, the Uniswap V3 team sought a new solution by deploying Uniswap V3 on the Filecoin VM to achieve higher scalability and accessibility while maintaining compatibility and security with Ethereum.

Concepts and Features of Filecoin VM

Filecoin VM is a virtual machine based on the Filecoin network, capable of running any Ethereum-compatible smart contracts, including decentralized applications (DApps) like Uniswap V3. The concept and design of Filecoin VM were proposed by Protocol Labs researcher Juan Benet in October 2023 and officially released in January 2024. The core idea of Filecoin VM is to leverage the storage and computing capabilities of the Filecoin network to provide a scalable, usable, and interoperable platform for the Ethereum ecosystem. The main features of Filecoin VM are as follows:

• High Speed: Filecoin VM utilizes a consensus mechanism called Filecoin Proof of Spacetime (PoSt), which achieves faster block times without sacrificing security.
• Low Cost: Filecoin VM employs a storage proof mechanism called Filecoin Proof of Replication (PoRep), which achieves higher storage efficiency and lower storage costs without compromising reliability.
• Large Capacity: Leveraging the vast storage and computing resources of the Filecoin network, Filecoin VM can support more smart contracts and data execution and storage, thus enhancing the scalability and usability of Uniswap V3. According to official Filecoin data, as of March 1, 2024, the total storage capacity of the Filecoin network has reached 2.7 EB (2700 PB), while the total storage capacity of the Ethereum network is only 0.2 TB (0.0002 PB).
• Compatibility: Filecoin VM is fully compatible with Ethereum’s smart contract standards such as EVM, WASM, and Ewasm. This means that any smart contracts developed on Ethereum can seamlessly migrate and run on Filecoin VM without any modification or adaptation required.

Conclusion

This article introduced the background, process, and results of deploying Uniswap V3 on Filecoin VM, as well as its impact and significance on the DeFi ecosystem. We believe that this is a groundbreaking event, bringing significant advantages and improvements to both Uniswap V3 itself and the entire DeFi ecosystem, while also providing new momentum and direction for the development and popularization of DeFi. We hope that this article provides you with useful information and insights, and we look forward to you experiencing and enjoying the benefits and opportunities brought by Filecoin VM and Uniswap V3. If you are interested in IPFS, you can follow WantPool’s WeChat official account for more IPFS-related news and collaboration opportunities. We also welcome your feedback and suggestions to drive the development of IPFS technology and applications together.

Disclaimer：

1. This article is reprinted from [WantPool]. *Forward the Original Title‘资讯|Uniswap V3 在 Filecoin VM 上的部署及其意义’. All copyrights belong to the original author [WantPool]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.