Tag Archives: uniswap

Uniswap Launches Unichain L2: All You Need to Know

Uniswap Launches Unichain L2: All You Need to Know

Since its launch in 2018, Uniswap has evolved to become a cornerstone of the decentralized finance (DeFi) industry, becoming one of the most widely used decentralized exchanges (DEXs).

Amid its growing popularity, Uniswap has struggled with high fees and slow transaction speeds. In a bid to address this issue, the platform has introduced Unichain, an Ethereum Layer 2 (L2) network specifically designed to optimize DeFi applications.

Similar to other L2s, Unichain is built to improve transaction speeds, lower gas fees, and improve user experience, all while using Ethereum‘s security.

In this article, we will explore Unichain and its aim to solidify Uniswap’s dominance in the DeFi ecosystem by offering a better user experience.

Key Takeaways

  • Uniswap has launched Unichain to solve high fees and slow transactions.
  • Unichain’s key features include Flashblocks for fair transaction ordering and Trustless Revert Protection.
  • The Validation Network ensures fast and secure transactions, preventing double-spending and block manipulation.
  • Unichain integrates with Ethereum’s Superchain for cross-chain liquidity.
  • With faster block times and no initial swap fees, Unichain aims to make DeFi trading faster and better.

What Is Unichain?

Unichain is a DeFi-focused Ethereum L2 chain designed to enable instant transactions, low fees, and cross-chain interoperability.

It was developed by Uniswap Labs using the OP Stack, an open-source rollup development stack. The OP Stack allows Unichain to join the Superchain, a network of interoperable L2 chains that share bridging, decentralized governance, upgrades, and a communication layer.

Anndy Lian, an intergovernmental blockchain expert, told Techopedia:

“Since its start, Uniswap has been a go-to for many in the DeFi community, providing a user-friendly platform for swapping tokens and adding liquidity.

“It’s only natural that Uniswap would evolve by creating its own blockchain, Unichain, to better serve and grow its business. This development not only solidifies Uniswap’s leadership but also tackles some of Ethereum’s challenges like high transaction costs and slower processing times.”

Unichain’s standout features are Verifiable Block Building and the Unichain Validation Network (PDF).

Verifiable Block Building

With Verifiable Block Building, Unichain aims to optimize user experience and market efficiencies by reducing block times, limiting maximal extractable value (MEV) losses, and protecting against failed transactions.

Built in collaboration with MEV solutions developer Flashbots, Unichain’s verifiable block-building feature looks to reduce the risk of “discretionary block ordering” by separating the role of block building from the sequencer.

Blocks on Unichain will be executed inside a trusted execution environment (TEE), which will allow external users to verify that blocks were built inside the TEE according to stated policies.

Unchain also aims to enable 200-millisecond to 250-millisecond block times by spitting each block into four “flashblocks.”

Unichain users will also benefit from the “trustless revert protection,” which reduces the risk of paying for a failed transaction. The TEE block builder simulates transactions while building blocks to detect and remove faulty transactions.

Unichain Validator Network

Sequencers are critical L2 network participants who are responsible for ordering transactions, batching them, creating new L2 blocks, and posting proofs to the Ethereum L1.

A notable drawback of Ethereum L2 chains is the centralization of sequencers. At the time of writing, popular L2 chains, including Arbitrum, OP Mainnet, and Base, each have only one sequencer.

Unichain, too, will operate as a single sequencer L2. To reduce risks related to a single sequencer, Unichain introduces a decentralized network of node operators that independently validate the latest blockchain state called the Unichain Validation Network.

To become a validator on Unichain, users must stake UNI tokens on the Ethereum mainnet. The main function of Unichain validators is to perform simple block attestations to increase confidence in the state of the chain.

Why Was Unichain Created & How Does It Improve Uniswap’s DeFi Offerings?

Launched in 2018, Uniswap is a pioneer of automated market-making (AMM) protocols and is currently the most popular DEX in DeFi history boasting a cumulative volume of over $1.64 trillion, as of February 2025.

As Uniswap saw meteoric growth amid increased DeFi adoption, it soon became evident that the Ethereum L1 blockchain was not equipped to give Uniswap the high performance it craved.

Therefore when Ethereum set course to scale its blockchain with the help of L2 solutions, Uniswap took the opportunity to create a performant application-specific L2 called Unichain.

With Unichain, the DEX pioneer looks to solve two pressing issues Uniswap faces on Ethereum: high transaction fees and fast transactions.

Unichain solves the first problem by being an L2 chain that processes transactions off-chain before bundling them to post to the Ethereum L1. The distribution of gas fees across several L2 transactions is said to lower fees by 95% compared to L1 gas fees.

For faster transactions, Unichain is customized with features such as TEE block-building to produce one-second block times, a significant upgrade from Ethereum’s 12-second block time. Unichain ultimately aims to hit 200-millisecond to 250-millisecond block times.

In a bid to solve the fragmentation problem caused by the excess of L2 chains in the market, Unichain will join the Superchain collective, which is a group of interoperable L2 chains created using the OP Stack.

As of February 2025, the Superchain collective had over 25 members including Base, OP Mainnet, Soneium, Zora, Ink, and HashKey Chain.

Features of Unichain

According to Unichain’s whitepaper, the project has introduced several features that help it enhance speed, security, and efficiency within Uniswap’s DeFi ecosystem. Here are its key components:

  1. Unichain implements Flashblocks, a mechanism that locks in transaction order before execution, to reduce the risks of frontrunning and harmful MEV extraction.
  2. “Trustless Revert Protection” — A unique mechanism that ensures users do not lose gas fees on failed transactions.
  3. Unichain features a Validation Network where independent validators stake UNI tokens to help confirm transactions quickly and securely. This system prevents double-spending and block manipulation.
  4. Unichain is built as part of Ethereum’s broader rollup ecosystem (Superchain), ensuring liquidity access across different chains.
  5. Unichain significantly reduces transaction costs compared to Ethereum’s mainnet, making DeFi trading and liquidity provision more accessible.

The Growing Trend of Appchains in 2025

Appchains are blockchains built for a single app or a small set of apps. They can be layer-2 or layer-3 solutions, often forked from existing blockchains to save time and improve compatibility.

Appchains are important because they speed up transactions, lower costs, and improve security by focusing resources on just one application. They also give developers more control over governance and upgrades.

So far in 2025, several new appchains have emerged, each tailored to optimize performance for specific dApps. Last month, Ethereum Layer 2 project Starknet introduced the SN Stack, a software suite enabling developers to launch customized appchains.

Similarly, HyperLiquid and dYdX have launched their appchains to improve decentralized trading by offering lower latency and deeper liquidity.

Future of Uniswap & Unichain

Uniswap’s Unichain could be the platform’s golden ticket to shape the future of DeFi with faster, cheaper, and more scalable trading.

Lian added:

“Unichain is set to shake things up in DeFi by offering much faster transaction speeds – starting with one-second block times, with the goal of cutting this down to 250 milliseconds.

“This is a game-changer for the quick trading and liquidity activities that Uniswap users are accustomed to. Plus, by making Unichain permissionless right from the start, Uniswap stays true to its roots of being open and community-driven.”

The Bottom Line

Unichain is a big deal for Uniswap, tackling high fees, slow transactions, and liquidity fragmentation while keeping the platform fast, cost-effective, and permissionless.

Unichain expects Uniswap with all the necessary tools to lead the next era of decentralized finance.

 

Source: https://www.techopedia.com/uniswap-launches-unichain-l2-all-you-need-to-know

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
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Will UNI’s 70% Rally Last? Risks of Uniswap’s Fee Proposal

Will UNI’s 70% Rally Last? Risks of Uniswap’s Fee Proposal

Leading decentralized exchange (DEX) Uniswap’s UNI token received a massive boost in late February 2024 following a proposal to share platform fees with token holders who delegate and stake their tokens.

Following the announcement, UNI jumped over 70% to a near two-year high of $12.79 on February 24 on expectations of higher demand and lower UNI circulating supply from increased staking on the platform.

Will the latest news affect the long-term Uniswap (UNI) price prediction?

In this article, we analyze Uniswap’s fee-sharing proposal and highlight risks that could cut short the token’s rally.

Uniswap’s Fee Switch Upgrade to Reward UNI Holders

On February 23, 2024, the Uniswap Foundation proposed a network upgrade to implement a fee mechanism that rewards UNI token holders that have delegated and staked their tokens.

The Uniswap Foundation said that the proposed fee mechanism upgrade seeks to invigorate Uniswap’s governance system by incentivizing token delegation and staking.

“Less than 10% of circulating UNI is used to vote on a given proposal. Further, a large portion of existing delegation is ‘stale.’ As of February 1, 2024, 14 of the top 30 delegates by voting power had not voted over the last 10 proposals, and only 7 of these delegates have ever created a proposal,” said Uniswap Foundation.

How Will Uniswap’s Fee Switch Upgrade Work?

At the time of writing, Uniswap collects 0.3% fees on v2 and 0.05% to 1% fees on v3 for swapping tokens, which are paid to liquidity providers (LP).

If the new fee mechanism is approved, UNI stakers and delegators will receive a part of the LP fees.

The fee mechanism proposal is also known as the “fee switch” upgrade because the collection of protocol fees is actually built into the Uniswap protocol. However, the protocol fee collection was never turned on and was initially set to zero.

Here are key details of the proposed Uniswap fee switch upgrade:

  • The protocol fees that will be distributed will be expressed as a fraction of LP fees.
  • The protocol fees will be adjustable by governance and can be 0, 1/4, 1/5, 1/6, 1/7, 1/8, 1/9, or 1/10 of the LP fees.
  • Protocol fees can be set on a pool-by-pool basis.
  • Fees are accrued in both tokens that comprise the pool.

Two new smart contracts will be introduced with the new fee mechanism proposal:

1. V3FactoryOwner.sol

This contract will bring a programmatic, permissionless collection of protocol fees. It will also allow the conversion of those fees into a common ERC20 for distribution to stakers.

2. UniStaker.sol

This contract will manage delegation and fee distribution.

Risks to UNI Token Price From New Fee Mechanism Proposal

News of Uniswap’s proposed fee mechanism that rewards UNI stakers and delegators was cheered by the crypto market participants who pushed the UNI token price to its highest since April 2022.

In this section, we highlight events that could cut short Unswap’s explosive rally.

Protocol Fee-Sharing Approval Awaits

UNI token holders have to bear in mind that the proposed fee-sharing mechanism has not been approved as of February 27, 2024.

The Uniswap community will begin voting on the proposal on March 1, 2024. All Uniswap proposals are subject to a 7-day voting period during which UNI token holders can vote for, against, or abstain from voting.

Although it is widely expected that the proposal will get approved (as it benefits UNI holders who are voting), there are certain members of the Uniswap community for whom the new fee mechanism is unfavorable — Uniswap liquidity providers.

Anndy Lian, an intergovernmental blockchain expert, told Techopedia:

“If the proposal is approved, it would activate the protocol fee switch and distribute a portion of the fees collected by Uniswap to the token holders. This would increase the demand and value of UNI and incentivize more participation and delegation in the governance process.

“However, if the proposal is rejected, it could lead to a sell-off and a drop in the UNI price.”

Uniswap Trading Volume, TVL, and Liquidity Expected to Fall on Protocol Fee Sharing

According to a report by crypto analytics firm Gauntlet, the distribution of protocol fees to UNI stakers and delegators can reduce the profitability of LPs on Uniswap.

The reduced LP yield is expected to cause some of them to withdraw liquidity from Uniswap. The less liquidity in Uniswap’s trading pools might result in higher slippages for traders. The higher slippages might cause poor user experience and force traders to choose rival DEXs, which might ultimately result in decreased trade volume on Uniswap.

It should also be noted that lower trade volume might result in lower protocol fees distributed as the platform collects fees when token swaps occur.

Gauntlet warned that setting extremely high protocol fees would result in the DEX being “unable to retain any LPs.”

The research firm also added that core trading volumes from retail and institutional traders will be less affected than MEV volume, which accounts for 40% to 80% of volume on Uniswap and other DEXs, as MEV trades are more sensitive to market liquidity.

Gauntlet noted:

“At the extreme, a 100% protocol fee should result in a 100% loss of all volume, since such a DEX would be unable to retain any LPs. However, even for an extremely aggressive 80% protocol fee, the simulated DEX still retains substantial core volume. This once again highlights that liquidity is rarely a limiting factor for most of Uniswap’s core users.

“We note that for a viable 10-25% protocol fee, the revenue curves are fairly linear and far from the theoretical maximum. We conclude that a protocol fee in this range would be effective at generating revenue and is unlikely to suffer from diminishing returns due to core volume loss.”

Uniswap (UNI) Price Analysis: Is the Rally Short-Lived?

The rally in UNI token price has cooled since the crypto jumped as much as over 70% on February 23, 2024, following the fee switch upgrade proposal announcement. Token holders took the chance to book profit after UNI hit near two-year highs of $12.79.

Blockchain analytics firm Lookonchain reported that a “Uniswap Team/Investor/Advisor wallet” sold 90,000 UNI tokens from $1.03 million in USDC.

 

Tony Severino, a CMT candidate, technical analyst, and the author of the CoinChartist VIP newsletter, was bullish on the UNI token as he shared his technical analysis on the crypto:

“UNI’s over 50% single-week surge might only be the beginning of a sustained trend change. The clean breakout above the weekly and monthly upper Bollinger Band is a technical buy signal following a nearly two-year accumulation range.”

Elsewhere, CoinCodex data showed UNI token trading at an overbought zone as its 14-day relative strength index stood at 75 points on February 27, 2024. The token traded at $10.05 at the time of writing, above its 200-day simple moving average of $5.68.

The Bottom Line

Uniswap’s fee switch proposal is expected to have lasting consequences if approved.

Although the crypto market is currently focused on the direct benefits that UNI holders hope to enjoy, the resulting effects on Uniswap governance from an approved fee switch upgrade cannot be understated.

The upgrade is expected to incentivize “active, engaged, and thoughtful delegation,” which will ultimately make Uniswap more decentralized, resilient, and community-driven.

 

 

Source: https://www.techopedia.com/uniswap-uni-price-analysis

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j