Decentralized exchange SushiSwap has launched concentrated liquidity pools (V3) on more than a dozen networks to increase capital efficiency across the sector.
The development is the largest deployment of this type of pool to date, the exchange said in a statement on Thursday.
The pools are intended to be capital efficient and are expected to allow liquidity providers (LPs) to further concentrate their funds in a tighter price range.
The result is a narrower spread between buy and sell orders, which in turn should reduce slippage for traders and allow for more accurate trade execution, higher trade volume, and better liquidity, ultimately benefiting higher-profit LPs.
SushiSwap V3 is now available on 13 networks including Arbitrum, Avalanche, BNB Chain, Ethereum, Optimism and Polygon.
In the coming weeks, SushiSwap announced it would also roll out support for 30 more concentrated liquidity networks in a “two-phase” approach.
The first phase, marked by today’s launch, will also look at deploying SushSwap’s exchange for zero-knowledge rollups in the near future, the statement said.
Zero-knowledge rollups are a Layer 2 scaling solution for blockchain networks with the goal of increasing throughput and reducing transaction costs. They work by bundling or “consolidating” multiple off-chain transactions into a single proof, known as zero-knowledge proof.
In Phase 2, Sushi intends to introduce a rewards program for the most efficient LPs, allowing them to earn the exchange’s native token, SUSHI. The program will initially be launched on Ethereum, Arbitrum, Optimism and Polygon with the intention of expanding to more chains as they are added.
In a bid to overhaul its token economy and boost user confidence, SushiSwap acquired competitor Uniswap’s latest automated market-maker module late last month after protection of its business source license expired. The move was accepted by industry experts as an attempt to “further scale growth” and increase capital efficiency.
SushiSwap continues to dwindle after an exploit in April in which a bug in the exchange’s Route Processor 2 caused the exchange’s smart contract to be emptied of $3.3 million.
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