It’s not just seasoned veterans of the crypto world into decentralized finance (DeFi) anymore. Aside from growing institutional interest, new developments in DeFi are making the trading of crypto assets, use of platforms and creation of apps more accessible to newbies than ever. “Gas fees” are no longer just for cars, in other words, and big finance no longer just for big banks. Two developments in the field, smartBCH and Uniswap’s new version three (V3) release, aim to streamline and improve the DeFi user experience.
Decentralized platforms and decentralized exchanges (DEXs) enable instant payments, trustless information exchange, disparate blockchain interoperability and the creation and execution of smart contracts — automated contracts capable of being executed to completion with no third-party intervention or oversight. As such, some crypto advocates are increasingly viewing traditional systems of value exchange as clunky, invasive and outdated.
One testament to DeFi’s growing popularity is the amount of money currently locked into decentralized platforms, assets and protocols. At time of publication, there is over US$130 billion in assets “locked,” staked across various protocols in DeFi, a marked increase from the US$30 billion seen at the start of 2021. Still, issues like high transaction fees (tx fees), difficult user experience (UX), and a general caution about the volatile world of crypto prices present an obstacle to onboarding. Some new developments, however, seek to remedy this.
SmartBCH for cheaper gas
SmartBCH, or “Smart Bitcoin Cash” is a sidechain being developed via the Bitcoin Cash blockchain, which seeks to enable cheaper interaction with the Ethereum network. Faced with Ethereum’s recently steep transaction fees or “gas fees” (the average hovering around US$13 at time of publication) new users may be more likely to turn away before even sending their first tokens.
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SmartBCH.org claims that “throughput will be as large as one billion gas every 15 seconds to allow more users to practice DeFi at very low cost.” In other words, the smartBCH sidechain would make the pipeline bigger for transactions, thus lowering the gas cost for users.
If the project is successful, it could expose both the Bitcoin Cash and Ethereum networks to a much larger user base. Developers are careful to note in the white paper, however, that smartBCH is still in its early stages.
“The Smart Bitcoin Cash, to a large extent, can be viewed as a demo and an experiment of the novel and aggressive techniques we have been developing, which aim to optimize storage and execution engines for extreme throughput. Just like other open-source projects, there might be bugs and vulnerabilities in its design and implementation.”
Uniswap V3 launch — customizable staking, and low fees
When it comes to customizable staking and investing, popular DeFi platform and exchange Uniswap, with its UNI token, is pushing the market forward in its own way. Uniswap’s V3 launches today with some features added, aiming to make the platform more customizable, user-friendly and efficient.
Uniswap got its start in 2018, and gained massive attention with the airdrop of its UNI token on Sept. 17, 2020. UNI is a governance token, allowing holders to have a say in how the Uniswap protocol is run.
Staking on Uniswap V3 is set to become more streamlined and customizable for liquidity providers (LPs) than in past versions, with a new concentrated liquidity feature allowing LPs to stake their assets to custom price ranges. Because liquidity was distributed evenly along a price curve in V2, much of it went unused, as trades that landed outside the staked asset price range could not reward the LP with fees.
See related article: Why more big investors are now seeking interest and yields in DeFi
As Uniwap.org notes: “In Uniswap v3, LP’s can concentrate their capital within custom price ranges, providing greater amounts of liquidity at desired prices. In doing so, LPs construct individualized price curves that reflect their own preferences.”
Due to the change in how liquidity is provided, positions will no longer be represented by fungible ERC-20 tokens, but as non-fungible tokens (NFTs). Still, “common shared positions can be made fungible (ERC20) via peripheral contracts or through other partner protocols,” the exchange notes.
Custom staking and all the fancy bells and whistles Uniswap boasts for V3 notwithstanding, “Even with these groundbreaking design improvements, the gas cost of v3 swaps on Ethereum mainnet is slightly cheaper than v2.”
Still, Uniswap is not without its critics. Being such a popular platform sometimes comes with a perceived sacrifice of open source crypto ethos. As Yahoo Finance reported in April, “The most significant criticism towards Uniswap V3 is the license under which it will operate. The code is no longer open for practical purposes. A fork of Uniswap V3 will not be legal for another 2 years.”