According to a recent statement, SushiSwap, a popular decentralized exchange (DEX), is rolling out its concentrated liquidity pools across 13 networks.
SushiSwap’s concentrated liquidity pools
This represents the most extensive deployment of concentrated liquidity pools, or V3 pools, to date, and SushiSwap is the first DEX to offer such broad coverage.
Concentrated liquidity, everywhere.
Capital Efficiency, Everywhere.
🔥 We’ve launched Sushi’s concentrated liquidity pools on 13 networks, with more coming #soon. This launch marks the largest deployment of v3 pools ever.
📖: https://t.co/NXW8QjFAkB
🌐: https://t.co/nJoKLALNZ7 pic.twitter.com/E8RdeyQff7
— Sushi.com (@SushiSwap) May 4, 2023
SushiSwap’s v3 pools offer several advantages over traditional liquidity pools. By concentrating liquidity in a smaller price range around the current market price, the potential for temporary losses is reduced, allowing Liquidity Providers (LPs) to provide liquidity within a narrow range for greater capital efficiency.
Concentrated liquidity pools aim to streamline the trading experience for traders and LPs. This reduces the spread between buy and sell orders, resulting in less slippage for traders and greater capital efficiency for LPs.
SushiSwap has also revamped its user interface for easier navigation. They said this would make it easier for users to access their positions and manage their trades more effectively. Additionally, the v3 release includes a new route processing contract for SushiSwap’s in-house smart order routing system, unifying liquidity pools across SushiSwap. This allows pools to interact with each other, effectively creating a large pool ecosystem of liquidity to trade against.
Along the road
The rollout of v3 pools across 13 networks is just the first step in increasing the acceptance of concentrated liquidity.
Over the next few weeks, SushiSwap plans to roll out its extensive, nearly 30-person liquidity network support in two phases.
In the first phase, version 3 will be rolled out across 13 networks, with more coming soon, ultimately covering all 30 chains live on SushiSwap. Additionally, SushiSwap plans to soon provide its full DEX for zero-knowledge rollups.
In the second phase, SushiSwap will introduce a unique reward program for the most efficient LPs. With this program, LPs are eligible for additional $SUSHI rewards. The rewards program will launch on Ethereum, Arbitrum, Optimism, and Polygon and will roll out as more chains are added.
SushiSwap’s introduction of v3 pools across multiple networks raises the question of whether other DEXs will follow suit. The advantages of concentrated liquidity pools are clear and the wide coverage of v3 pools gives SushiSwap a significant advantage over its competitors.
Despite the launch, SUSHI, SushiSwap’s native token, is still trading lower. The token is down 20% at the time of writing on May 6th from the April 2023 highs.
SushiSwap price on May 6th| SUSHIUSDT on Binance, TradingView
As acceptance of concentrated liquidity pools increases, focus would be on how other DEXs react and whether more will fork Uniswap v3 code. The Uniswap v3 business license expired in early April.
PancakeSwap, a popular DEX on the BNB Smart Chain (BSC), was the first to fork Uniswap v3 and released PancakeSwap v3 in April.
-Functional image by Canva, chart by TradingView
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