The [Uniswap Protocol](https://blog.uniswap.org/what-is-uniswap) is a vital piece of crypto infrastructure for millions of swappers, offering deep liquidity to support over $1.6 trillion in volume. [Uniswap v4](https://blog.uniswap.org/uniswap-v4) is the latest evolution of the Protocol, which allows developers to build custom AMM features on top of Uniswap using [hooks](https://twitter.com/Uniswap/status/1669425061156081665).

Previously we wrote about the time-weighted average market maker [hook](https://blog.uniswap.org/v4-twamm-hook). Today, we're focusing on a truncated oracle. Price oracles, like the ones in Uniswap v3 pools, convey price information about a pool's price to other DeFi protocols. A truncated price oracle, deployed as an optional v4 hook, blunts the price impact of large trades, making them more resistant to oracle manipulation techniques and safer for DeFi.

# The role of a price oracle
A price oracle is a tool used to view price information about a given asset. These onchain oracles are trustless price feeds that reflect onchain data. Uniswap [v3 price oracles](https://docs.uniswap.org/concepts/protocol/oracle) allow smart contracts to integrate and consume onchain pricing data across DeFi to create more composable applications. Uniswap v3 price oracles were built with Proof of Work in mind, but the merge to Proof of Stake changed a few key assumptions for the oracle, making it less secure.

However, the importance of price oracles makes them a [target](https://medium.com/beaver-smartcontract-security/defi-security-lecture-7-price-oracle-manipulation-d716cdeaaf77) for bad actors who have an economic incentive to manipulate them. While it's [too costly](https://blog.uniswap.org/uniswap-v3-oracles#how-does-someone-manipulate-the-twap) to manipulate prices of highly liquid pools on Uniswap v3, we can modify the oracle to be even more resilient.

A truncated price oracle uses a slightly different formula to calculate prices and serves more reliable prices that are less subject to manipulation.

# What is the truncated oracle hook?
The truncated oracle is an onchain price oracle that records the price of an asset in a Uniswap liquidity pool using the [geometric mean formula](https://en.wikipedia.org/wiki/Geometric_mean). This oracle is then truncated -- meaning the recorded price can only move up or down to a maximum amount in a single block.

Truncation helps smooth out the price impact of large swaps over time -- whether they are legitimate or malicious. If a bad actor tried to manipulate the price, they would have to sustain their manipulation over many blocks -- making the truncated oracle much costlier to manipulate.

![image2](//images.ctfassets.net/oc3ca6rftwdu/38y7eGF1gyyTsZBgQs9tzR/c407b5b537a5b3fb6d5fe29b140ff0ed/image2.jpg)

## How it works
The [hook contract](https://twitter.com/Uniswap/status/1669425061156081665) stores a copy of the pool's price. In Uniswap v3 and v4, these prices are represented as [ticks](https://docs.uniswap.org/concepts/protocol/concentrated-liquidity#ticks). Before a swap or LP adjustment, the hook compares the pool's current tick to the tick stored in its contract. If the difference between these two numbers is less than some number (we use [9,116](https://github.com/Uniswap/v4-periphery/blob/trunc-oracle/contracts/libraries/TruncatedOracle.sol#L21C13-L21C13) based on our [research](https://blog.uniswap.org/uniswap-v3-oracles#fnref-10)), then the hook will update to this new tick. However, if the pool's current tick has moved more than 9,116 units, the oracle will cap its tick value to +- 9,116, limiting how much a pool's tick can move in a block.

After the hook has updated, swap or LP transactions will execute until the block is over. The cycle then repeats the next block that triggers the hook contract.

![image1](//images.ctfassets.net/oc3ca6rftwdu/4RqCT2XxUlQlpWwlFvqT8O/2168872b682e26405504b3832e7b971b/image1.jpg)

By truncating how drastically price (tick) swings can be recorded, the oracle ignores outliers and smoothes out the price impact of large swaps. If a large price swing is sustained, then the oracle would quickly catch up to the pool’s tick.

# Truncated oracles can be safer
Let's use a lending market as an example to better understand the truncated oracle. DeFi lending markets let users deposit assets as collateral to borrow against another asset, up to some fraction of the collateral's value.

For example, if a lending market has a collateralization ratio of 1.5, then Alice would need to put up at least $1,500 in collateral to borrow 1,000 USDC. If ETH is $1,000, then Alice would need to deposit at least 1.5 ETH. Alice needs to maintain a minimum of a 1.5 ratio. If her 1.5 ETH drops in value, then anyone can repay her bad debt and claim the 1.5 ETH collateral.

Lending markets use price oracles to compare the prices of ETH and USDC. While manipulating the ETH/USDC pool on Uniswap v3 is currently [economically impractical](https://blog.uniswap.org/uniswap-v3-oracles), Bob, a malicious actor, can tip the scales on a smaller DEX by executing a large swap and tanking the price of ETH. This allows Bob to manipulate the lending market into believing that Alice's position needs to be liquidated. Then, Bob can pay off Alice's loan for less than $1,500 and take her 1.5 ETH.

This type of manipulation is one of the most common ways that protocols that rely on price oracles can be manipulated into losing money. Lending is just one example. Other DeFi primitives like perpetuals also rely on onchain price oracles.

If Alice's lending market used a truncated price oracle, then Bob would have to sustain his market manipulation over time. In this example, Bob would have to wait 15 blocks for the oracle to catch up before he could try to liquidate Alice's position. In those five minutes, arbitrage bots would likely eat away at Bob's swap, leaving him with nothing. That cost for Bob is just too high.

![image3](//images.ctfassets.net/oc3ca6rftwdu/3XsGIKZZuHyjZNi6l1sqMt/7c9a6de84b400f1d38b26131ae95a7ca/image3.jpg)

---

*To learn more about the truncated oracle hook, you can look at our sample implementation on [Github](https://github.com/Uniswap/v4-periphery/blob/trunc-oracle/contracts/hooks/TruncGeoOracle.sol). You can read about v4 in our [whitepaper](https://github.com/Uniswap/v4-core/blob/main/whitepaper-v4-draft.pdf), check out our [code](https://github.com/Uniswap/v4-core/tree/main), consider [contributing](https://github.com/Uniswap/v4-core/blob/main/CONTRIBUTING.md), and connect with the Labs team and other devs on [Discord](https://discord.com/invite/FCfyBSbCU5). Uniswap v4 and the truncated hook are still being developed. The final specs may vary.*

This example Uniswap v4 hook implements a Truncated Geometric Mean oracle. This oracle is more resistant to manipulation techniques by blunting the price impact of large trades.

Uniswap v4 Truncated Oracle Hook

The [Uniswap Protocol](https://blog.uniswap.org/what-is-uniswap) is a vital crypto infrastructure for millions of swappers, offering deep liquidity to support over $1.6 trillion in trading volume. [Uniswap v4](https://blog.uniswap.org/uniswap-v4) is the latest evolution of the Protocol. Developers can build custom AMM features on top of Uniswap using [hooks](https://twitter.com/Uniswap/status/1669425061156081665).

One hook we're excited about is the time-weighted average market maker  ([TWAMM](https://github.com/Uniswap/v4-periphery/blob/main/contracts/hooks/examples/TWAMM.sol)), a new type of swap that reduces the price impact of larger orders by breaking them into small pieces over time.

# What is the TWAMM hook?
[TWAMM](https://www.paradigm.xyz/2021/07/twamm) gets swappers better prices by splitting a large single swap order into smaller ones that steadily execute over time. These smaller swaps are less likely to move the market price.
## How it works
In Uniswap v4, each pool can insert hooks that run at various points of a pool action's lifecycle. These hooks are smart contracts distinct from the core v4 liquidity contract. Orders are deposited into the TWAMM hook, and the user sets the duration they want their order to execute over. These two parameters instruct the TWAMM hook to swap at the price of each block until the expiration.

TWAMM orders are always the first pool action in a block, meaning they happen before any swaps or LP positions are adjusted. The first time someone swaps or LPs in a block, the pool will first check whether the TWAMM orders have been fulfilled. If there are any open TWAMM orders, the TWAMM hook will settle those orders before continuing on to complete any swaps or LP transactions before repeating the process with the next block. Executing TWAMM orders as the first pool action in the block protects users from frontrunning MEV.

![image2](//images.ctfassets.net/oc3ca6rftwdu/1BgI7XExy0srK4xYrMuB1h/2d46f3c2c87145ae91de97867cd5f795/image2.png)
<center><font size="2"><a href="https://www.paradigm.xyz/2021/07/twamm#infinitesimal-virtual-orders">Source</a></font></center>

# TWAMM pool use cases
A TWAMM liquidity pool is a major unlock for swappers. Any order that does not need to be executed immediately benefits from the TWAMM hook saving on price impact and MEV.

Whether it’s a swapper moving large volumes or a DAO converting its treasury, large swaps leak a lot of value that swappers miss out on. TWAMM pools can smooth out their price curve by breaking up the swap.
## Recurring investments
The TWAMM hook is great for longer-term investors who want "set it and forget it" recurring investments. Also known as dollar-cost average (DCA) is a popular trading strategy for passive buyers to invest the same amount at regular intervals. The steady cadence of investments offsets daily market volatility by averaging the purchases over time.

Say Alice wants to regularly buy $1,000 of ETH per month. She could split that into $1,000 a month, $250 a week, or $33 a day. Or $5,000 over five months. The TWAMM hook is a "set it and forget it" pool that can do exactly that.

With the TWAMM hook, Alice can deposit $1,000 into the pool contract and tell it to swap those funds over the span of a month. The TWAMM pool will execute a proportional swap every block until that month ends, even better than once daily.
## A DAO converting its treasury
DAOs buy and sell large quantities of cryptocurrencies to diversify and manage their treasury risk, like when [ENS DAO](https://www.theblock.co/post/209222/ens-dao-votes-to-sell-16-5-million-of-eth-for-usdc-via-cow-swap) sold $16.5M of ETH for USDC.

Onchain markets can't easily absorb large volumes without impacting price and inviting MEV, which results in poor execution. If Alice's DAO sold $10M of ETH for USDC, it might increase the price by 0.61%, costing her $60,000. To avoid "leaking" value like this through large orders, DAOs might work with [trading desks](https://snapshot.org/#/gitcoindao.eth/proposal/0x0eb45cfd31ddd2701af3d74ce38a9e87292fe42a6b40b26812ff9889b07daeb3) who break big orders into smaller ones.

The TWAMM hook can let DAOs market sell large portions of their treasuries. If Alice's DAO can split their order over time, they could sell smaller quantities of tokens until the date they set, letting the market smoothly adjust to thousands of swaps instead of doing it in one go. Using the TWAMM hooks, the DAO's $10M order can execute at every block for the next 30 days.

The particular hook design we created also protected Alice's DAO from frontrunning. By design, TWAMM executions are guaranteed to be the first pool action in each block. She cannot be frontrun because her order happens before any other pool swaps can settle.

---
To learn more about the TWAMM hook, you can look at our sample implementation on [Github](https://github.com/Uniswap/v4-periphery/blob/main/contracts/hooks/examples/TWAMM.sol). You can read about v4 in our [whitepaper](https://github.com/Uniswap/v4-core/blob/main/whitepaper-v4-draft.pdf), check out our [code](https://github.com/Uniswap/v4-core/tree/main), consider [contributing](https://github.com/Uniswap/v4-core/blob/main/CONTRIBUTING.md), and connect with the Labs team and other devs on [Discord](https://discord.com/invite/FCfyBSbCU5). Uniswap v4 and the TWAMM hook are still being developed. The final specs may vary.

This example TWAMM Uniswap v4 hook can reduce the price impact on larger trades by splitting them into smaller transactions that execute over time.

Uniswap v4 TWAMM Hook

Part 1 focused on Q notation, ticks, and exchange rates. Part 2 of this math series focuses on virtual liquidity, calculating LP positions, and uncollected fees.

A Primer on Uniswap v3 Math Part 2: Stay Awake by Reading it Aloud

*By [Hayden Adams](https://twitter.com/haydenzadams)*

<Video source="//videos.ctfassets.net/oc3ca6rftwdu/31gTeffwIKqR7UXpSEwllQ/008fba522093defb918b9123d74869ab/Final_-_Blog_.mp4" description="Uniswap v4 Announcement Video" />

Two years ago, we released [Uniswap v3](https://blog.uniswap.org/uniswap-v3), a watershed moment for onchain liquidity and DeFi. Today, the Uniswap Protocol is the largest decentralized exchange protocol, processing over $1.5 trillion in trading volume. As public infrastructure, it's a vital part of the crypto ecosystem.

As technology and markets evolve, so must the Uniswap Protocol. That's why we're thrilled to introduce our vision for Uniswap v4, which we believe will open up a world of possibilities for how liquidity is created and how tokens are traded onchain.

We are releasing the draft code now so that v4 can be built in public, with open feedback and meaningful community contribution. We expect this will be a months-long process. You can read the open-sourced, early version of the Uniswap v4 [core](https://github.com/Uniswap/v4-core) and [periphery](https://github.com/Uniswap/v4-periphery) repositories, read the draft technical [whitepaper here](https://github.com/Uniswap/v4-core/blob/main/whitepaper-v4-draft.pdf), and learn more about how to [contribute here](https://github.com/Uniswap/v4-core/blob/main/CONTRIBUTING.md).

Uniswap v3 took a powerful, opinionated approach to liquidity provision, balancing an incredibly complex tradeoff space. New features come at the expense of higher fees and code complexity.  For example, v3 enshrined oracles, allowing builders to integrate real-time, onchain pricing data, but at the expense of some increased costs for swappers.

Our vision with Uniswap v4 is to allow anyone to make these tradeoff decisions through the introduction of "hooks." Hooks are contracts that run at various points of a pool action's lifecycle. Pools can make the same tradeoffs as v3, or they can add totally new functionality. For example, v4 will allow pools that natively support dynamic fees, add onchain limit orders, or act as a time-weighted average market maker (TWAMM) to spread out large orders over time.

Along with this customization, Uniswap v4's architecture reduces costs and ensures efficiency. It introduces a new "singleton" contract, where all pools live within a single smart contract. We believe the combination of hooks and singleton architecture creates an incredibly powerful platform ⸺ fast, safe pool customization and efficient routing across many pools. Uniswap v4 brings fast, expressive AMM innovation within one powerful ecosystem.

# What is Uniswap v4

## Hooks & custom pools
Each Uniswap liquidity pool has a lifecycle. During a pool’s lifecycle, several things happen. A pool is created with a default fee tier. Liquidity is added, removed, or readjusted. And, of course, users swap tokens. In Uniswap v3, these lifecycle events are tightly coupled and executed in a very strict sequence.

To create room for customizable liquidity in Uniswap v4, we want to create a way for pool deployers to introduce code that performs a designated action at key points throughout the pool’s lifecycle – like before or after a swap, or before or after an LP position is changed.

Enter hooks, which are plugins to customize how pools, swaps, fees, and LP positions interact. Developers can innovate on top of the Uniswap Protocol’s liquidity and security to create customized AMM pools through hooks that integrate with v4’s smart contracts.

Some experiments we’re excited about include:
- A time-weighted average market maker ([TWAMM](https://www.paradigm.xyz/2021/07/twamm))
- Dynamic fees based on volatility or other inputs
- Onchain limit orders
- Depositing out-of-range liquidity into lending protocols
- Customized onchain oracles, such as geomean oracles
- Autocompounded LP fees back into the LP positions
- Internalized MEV profits are distributed back to LPs

But really, the sky's the limit. Because each pool is now defined by more than just the tokens and fee tier, we'll see pools of all colors, shapes, and sizes. Uniswap v4’s core logic, like v3, is non-upgradeable. While each pool can use its own hook smart contract, hooks can be limited to only specific permissions determined at pool creation. 

We’ve created sample hook contracts to start to understand the current framework [here](https://github.com/Uniswap/v4-periphery/tree/main/contracts/hooks/examples). We expect developers to think of new and interesting ways to build features we haven’t even thought of yet. 

![313](//images.ctfassets.net/oc3ca6rftwdu/4uGCTtanHSxuojh3Qj7y4p/e782249279ce96a75dcb53be129eb3a8/313.jpg)

## Improved architecture and gas savings
In Uniswap v3, we deploy a new contract for every pool, making creating pools and performing multi-pool swaps more expensive. In v4, we hold all the pools in one singleton contract, which will provide important gas savings because swaps will no longer need to transfer tokens between pools held in different contracts. Early estimates show that v4 reduces pool creation gas costs by 99%. Hooks introduce a world with endless options and singleton allows you to efficiently route across all of them.

This singleton architecture is complemented by a new "flash accounting" system. Instead of transferring assets in and out of pools at the end of every swap in v3, this system transfers only on net balances -- meaning a far more efficient system that provides additional gas savings in Uniswap v4.

We believe the best design for flash accounting uses "transient storage," which would be enabled by [EIP-1153](https://eips.ethereum.org/EIPS/eip-1153). This EIP is being considered as part of the Ethereum Cancun hardfork and will bring even bigger gas improvements and cleaner contract designs across a wide variety of applications.

With the efficiency of singleton and flash accounting, fee tiers no longer need to be limited. Pool creators can set them at the level that makes them most competitive or customize them with a dynamic fee hook. v4 also brings back support for native ETH, which offers additional gas savings.

![Chart (1)](//images.ctfassets.net/oc3ca6rftwdu/4z47smfdLSiXwlOu1siZXm/56f8fcb7e615fb9b6e1bad30ebbc701b/Chart__1_.jpg)

# License and Governance
As always, we strongly believe that core financial infrastructure should be open and transparent. We also believe that the Uniswap community — the people and teams that support, use, and build on the Protocol — should govern v4 of the Protocol, just as they govern prior versions.

The code will be released under a Business Source License 1.1, which limits the use of the v4 source code in a commercial or production setting for up to four years, at which point it will convert to a GPL license into perpetuity. Like v3, Uniswap Governance and Uniswap Labs can grant exceptions to the license.

The Protocol fee mechanism will also be modeled after v3. Governance will be able to vote to add a Protocol fee to any pool, up to a capped amount. More details on the fee mechanism can be found in [the whitepaper](https://github.com/Uniswap/v4-core/blob/main/whitepaper-v4-draft.pdf).

All about our vision for Uniswap v4 and why we're building in public.

Our Vision for Uniswap v4


_By: [Austin Adams](https://twitter.com/AustinAdams10), [Sara Reynolds](https://twitter.com/saraareynolds), and [Rachel Eichenberger](https://twitter.com/eich4all) [^1]_

[^1]: We thank [Atis Elsts](https://twitter.com/atiselsts) for their comments.

Uniswap Protocol makes swapping simple and accessible, but its math may not be. To help developers building on the Protocol, analysts drawing insights, and researchers studying market activity, let’s dig into a few of the most common technical questions we see.
- What is Q Notation?
- How do I calculate the current exchange rate?
- How do tick and tick spacing relate to sqrtPrice?

[Part 2](https://blog.uniswap.org/uniswap-v3-math-primer-2) focuses on:
- Working with virtual liquidity
- Calculating LP holdings
- Calculating uncollected fees in a position

![figure1 (1)](//images.ctfassets.net/oc3ca6rftwdu/6EXUbqrPBsyeuoiGtEAXuP/c10bb96e4e9cc8e069a5cbf01f11dc6f/figure1__1_.png)

<font size="1">
<a href="https://twitter.com/0xKaden/status/1603545440913223682">Source</a>
</font>

# What is a Q notation?

If you've ever read the Uniswap v3 code and seen variables that end with X96 or X128, you have come across what we call Q notation. With Uniswap v3 came the heavy usage of the Q notation to represent fractional numbers in [fixed point](https://en.wikipedia.org/wiki/Q_(number_format)) arithmetic. If that seems like word salad to you, then don't worry! 

Long story short, you can convert from Q notation to the “actual value” by dividing by <Latex>$ 2^k $</Latex> where <Latex>$ k $</Latex> is the value after the X. For example, you can convert `sqrtPriceX96` to sqrtPrice by dividing by <Latex> $ 2^{96}$</Latex>

Q notation specifies the parameters of the binary fixed point number format, which allows variables to remain integers, but function similarly to floating point numbers. Variables that must be as precise as possible in Uniswap v3 are represented with a maximum of 256 bits and account both for overflow and potential rounding issues. By using Q notation, the protocol can ensure that granular decimal precision is not lost.

### Code example
```js
//  Get sqrtPriceX96 from token reserves
//  In scripts that use Javascript, we are limited by the size of numbers with a max of 9007199254740991. Since crypto 
//  handles everything in lowest decimal format, We have to use a version of BigNumber, allowing Javascript to handle 
//  numbers that are larger than the max.
//  Here we use a Pure BigNumber script from EthersJS along with BigNumber itself
//  you will also see us use JSBI is a pure-JavaScript implementation of the official ECMAScript BigInt proposal

import { BigNumber } from 'ethers'; // ← used to convert bn object to Ethers BigNumber standard 
import bn from 'bignumber.js'      //  ← here we use BigNumber pure to give us more control of precision
                                  //     and give access to sqrt function

//bn.config allows us to extend precision of the math in the BigNumber script
bn.config({ EXPONENTIAL_AT: 999999, DECIMAL_PLACES: 40 }) 
function encodePriceSqrt(reserve1, reserve0){
  return BigNumber.from(
    new bn(reserve1.toString()).div(reserve0.toString()).sqrt()
      .multipliedBy(new bn(2).pow(96))
      .integerValue(3)
      .toString()
  )
}

              // reserve1         ,  reserve0
encodePriceSqrt(1000000000000000000, 1539296453)
```

# How do I calculate the current exchange rate?
One of the first questions people naturally ask in a market is “what is the current price”? For Uniswap v3, the price is quoted as the current exchange from token 0 to token 1 and is found in `sqrtPriceX96`. 

Uniswap v3 shows the current price of the pool in `slot0`. `slot0` is where most of the commonly accessed values are stored, making it a good starting point for data collection. You can get the price from two places; either from the `sqrtPriceX96` or calculating the price from the pool `tick` value[^2]. Using `sqrtPriceX96` should be preferred over calculating the price from the current `tick`, because the current `tick` may lose precision due to the integer constraints (which will be discussed more in depth in a later section).

[^2]: price = 1.0001^tick, and this equation will be explained more later in the blog post.

`sqrtPriceX96` represents the sqrtPrice times <Latex> $ 2^{96}$</Latex> as described in the Q notation section. <Latex> $ 2^{96}$</Latex> was specifically was chosen because it was the largest value for precision that allowed the protocol team to squeeze the most variables into the contract storage slot for gas efficiency. 

### Math

First, as previously discussed, sqrtPrice is the `sqrtPriceX96` of the pool divided by <Latex> $ 2^{96}$</Latex>

<Latex displayMode={true}>$ sqrtPrice = sqrtPriceX96 / 2^&#123;96&#125; $</Latex>

You can convert the sqrtPrice of the pool into the price of the pool by squaring the sqrtPrice.

<Latex displayMode={true}>$ price = sqrtPrice^2 $</Latex>

Putting those equations together

<Latex displayMode={true}>$ price = (sqrtPriceX96 / 2^&#123;96&#125;)^2 $</Latex>

### Math Example

In the USDC-WETH 5-bps pool (also the .05% fee tier), token0 for this pool is USDC and token 1 is WETH. For this pool, <Latex> $ price = \frac&#123;token1&#125;&#123;token0&#125; = \frac&#123;WETH&#125;&#123;USDC&#125; $</Latex>. This also represents the exchange rate from <Latex> $ token0 $</Latex> to <Latex> $ token1 $</Latex>.  For this specific pool, this exchange rate is the amount of WETH that could be traded for 1 USDC[^3].

[^3]: It is important to note that this is backwards to what people expect, which is a problem that many developers run into. Uniswap v3 chooses token ordering by their contract address, and the USDC contract address comes first.

From `slot0` in the pool contract at address [0x88e6a0c2ddd26feeb64f039a2c41296fcb3f5640](https://etherscan.io/address/0x88e6a0c2ddd26feeb64f039a2c41296fcb3f5640) at [block number 15436494](https://etherscan.io/block/15436494).

<Latex displayMode={true}>$ sqrtPriceX96 = 2018382873588440326581633304624437 $</Latex>

Plugging this value into the equation above, we have

<Latex displayMode={true}>$ \frac&#123;WETH&#125;&#123;USDC&#125; = (2018382873588440326581633304624437 / 2^&#123;96&#125;)^2 $</Latex>

<Latex displayMode={true}>$ \frac&#123;WETH&#125;&#123;USDC&#125; = 649004842.70137 $</Latex>

erc20 tokens have built in decimal values. For example, 1 WETH actually represents <Latex> $ 10^{18} $</Latex> WETH in the contract whereas USDC is <Latex> $ 10^6 $</Latex>. Therefore, USDC has 6 decimals and WETH has 18.

<Latex displayMode={true}>$ adj\frac&#123;WETH&#125;&#123;USDC&#125; = 649004842.70137 / \frac&#123;10^&#123;18&#125;&#125;&#123;10^6&#125; $</Latex>

<Latex displayMode={true}>$ adj\frac&#123;WETH&#125;&#123;USDC&#125; = 649004842.70137 / 10^&#123;12&#125; $</Latex>

Most exchanges quote the multiplicative inverse, <Latex> $ price = $ $ adj\frac&#123;USDC&#125;&#123;WETH&#125; $</Latex> which is the amount of USDC that represents 1 WETH. To adjust for this, we also need to divide <Latex> $ 1/price $</Latex> as 

<Latex displayMode={true}> $ adj\frac&#123;USDC&#125;&#123;WETH&#125; = \frac&#123;1&#125;&#123;adj\frac&#123;WETH&#125;&#123;USDC&#125;&#125; $</Latex> 

<Latex displayMode={true}> $ adj\frac&#123;USDC&#125;&#123;WETH&#125; = \frac&#123;1&#125;&#123;649004842.70137 / 10^&#123;12&#125;&#125; $</Latex> 

<Latex displayMode={true}> $ adj\frac&#123;USDC&#125;&#123;WETH&#125; = \frac&#123;10^&#123;12&#125;&#125;&#123;649004842.70137&#125; $</Latex>

<Latex displayMode={true}> $ price = adj\frac&#123;USDC&#125;&#123;WETH&#125; = \space \space \sim1540.82  $</Latex> 

This is the number generally seen quoted on exchanges and data sources. See the formula and math here: <a href="https://www.symbolab.com/solver/step-by-step/%5Cfrac%7B1%7D%7B%5Cleft(%5Cfrac%7B2018382873588440326581633304624437%7D%7B2%5E%7B96%7D%7D%5Cright)%5E%7B2%7D%5Ccdot%20%5Cleft(%5Cfrac%7B10%5E%7B6%7D%7D%7B10%5E%7B18%7D%7D%5Cright)%7D?or=input">Symbolab Big Math</a>

### Code Example
This will give the price of both tokens in relation to the other, as all pools will have two prices.

```js
// Get the two token prices of the pool
// PoolInfo is a dictionary object containing the 4 variables needed
// {"SqrtX96" : slot0.sqrtPriceX96.toString(), "Pair": pairName, "Decimal0": Decimal0, "Decimal1": Decimal1}
// to get slot0 call factory contract with tokens and fee, 
// then call the pool slot0, sqrtPriceX96 is returned as first dictionary variable
// var FactoryContract =  new ethers.Contract(factory, IUniswapV3FactoryABI, provider);
// var V3pool = await FactoryContract.getPool(token0, token1, fee);
// var poolContract =  new ethers.Contract(V3pool, IUniswapV3PoolABI, provider);
// var slot0 = await poolContract.slot0();

function GetPrice(PoolInfo){
	let sqrtPriceX96 = PoolInfo.SqrtX96;
	let Decimal0 = PoolInfo.Decimal0;
	let Decimal1 = PoolInfo.Decimal1;

    const buyOneOfToken0 = ((sqrtPriceX96 / 2**96)**2) / (10**Decimal1 / 10**Decimal0).toFixed(Decimal1);

	const buyOneOfToken1 = (1 / buyOneOfToken0).toFixed(Decimal0);
	console.log("price of token0 in value of token1 : " + buyOneOfToken0.toString());
	console.log("price of token1 in value of token0 : " + buyOneOfToken1.toString());
	console.log("");
		// Convert to wei
	const buyOneOfToken0Wei =(Math.floor(buyOneOfToken0 * (10**Decimal1))).toLocaleString('fullwide', {useGrouping:false});
	const buyOneOfToken1Wei =(Math.floor(buyOneOfToken1 * (10**Decimal0))).toLocaleString('fullwide', {useGrouping:false});
	console.log("price of token0 in value of token1 in lowest decimal : " + buyOneOfToken0Wei);
	console.log("price of token1 in value of token1 in lowest decimal : " + buyOneOfToken1Wei);
	console.log("");
}

        // WETH / USDC pool 0.05%    →(1% == 10000, 0.3% == 3000, 0.05% == 500, 0.01 == 100)
("0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2", "0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48", 500)
// Output
price of token0 in value of token1 : 1539.296453
price of token1 in value of token0 : 0.000649647439939888
price of token0 in value of token1 in lowest decimal : 1539296453
price of token1 in value of token1 in lowest decimal : 649647439939888
```

# Relationship between tick and sqrtPrice

Ticks are used in Uniswap v3 to determine the liquidity that is in-range. Uniswap v3 pools are made up of ticks ranging from -887272 to 887272, which functionally equate to a token price between 0 and infinity[^4], respectively. More on this below.

[^4]: This conversion from tick to price directly equates to 2^-128 to 2^128, which are functionally 0 to infinity.

## Ticks vs Tick-Spacing
We find that end users are constantly confused by ticks vs tick-spacing.
- Ticks: Units of measurement that are used to define specific price ranges
- Tick-spacing: The distance between two ticks, as defined by the fee tier

Not every `tick` can be initialized. Instead, each pool is initialized with a `tick-spacing` that determines the space between each `tick`. Tick-spacings are also important to determine where liquidity can be placed or removed. If there is an initialized `tick` at tick 202910, then liquidity at most can change as early as the first value given by the `tick-spacing`, which is 202910 + 10 for the 5 bps pool[^5].

[^5]: Ticks are only initialized if someone has placed liquidity that either starts or ends at that tick. It is possible that no one placed liquidity ending at the next tick, so it may not be initialized. However, positions can only be placed at ticks that are determined by the tick-spacing.

<div align="center">
  <strong>Table 1.</strong>  Relationship between fees and tick-spacing
</div>

![table1 (2)](//images.ctfassets.net/oc3ca6rftwdu/4frFW4vjWztra6jaQRqjve/241b6f514df980da1e1afc11709a82bd/table1__2_.png)

Using the table above, we can determine the `tick-spacing` of the pool directly from the fee-tier. We show both the percentage and the bps format for these values, as used interchangeably by practitioners, but may be confusing for new users. 

<div align="center">
  <strong>Figure 1.</strong> Example of tick-spacing vs ticks for WETH-USDC 5 bps pool
</div>

![figure2 (1)](//images.ctfassets.net/oc3ca6rftwdu/1CAALWusWI2Q2Ns1CvS2Zs/2388c8df6c862e74cbb88830847a6296/figure2__1_.jpeg)

In Figure 1, we show a small portion of the liquidity distribution for the WETH-USDC 5 bps pool at the block previously discussed. The dashed black lines indicate possible initialized ticks (which occur every at minimum `tick-spacing` of 10 for 5 bps pools). The solid black line indicates the current `tick` of the pool. 

Also notice that liquidity is constant between two dashed lines. This is because liquidity can only change when a tick-spacing is crossed. Between those ticks, the liquidity in-range is treated like an xy=k curve like Uniswap v2 for trading. If that confuses you, don't worry, it's not important. If you want to learn more about liquidity, we will talk more about liquidity in a later post.

## What does a tick represent?
Ticks are related directly to price. To convert from tick <Latex> $ \tau $</Latex>, to price, take <Latex> $ 1.0001^\tau $</Latex> 1.0001  to get the corresponding price. Let the tick-spacing be <Latex> $ ts $</Latex> and <Latex> $ i_c $</Latex> be the lower bound of the active tick-range, then the current tick-range is  <Latex> $ [i_c, i_c + ts) $</Latex> We can then map the current tick-range to the current price-range with 

<Latex displayMode={true}>  $ [1.0001^&#123;i_c&#125;, 1.0001^&#123;i_c + ts&#125;) $</Latex>

**Note**: Everything up-to, but not including the upper tick is part of the current range

While liquidity can only be added at initialized ticks, the current market-price can be between initialized ticks. In the example above, the USDC-WETH 5-bps pool is at tick 202919. This number is not evenly divisible by the `tick-spacing` of 10, we need to find the nearest numbers above and below that are. This corresponds to tick 202910 and tick 202920, which we showed in Figure 1.

The current `tick-range` can also be calculated by [^6]

[^6]: <Latex>  $ \lfloor x \rfloor $</Latex> represents the floor of the value <Latex>$ x $</Latex>, or the greatest integer value that is less than or equal to <Latex>$ x $</Latex>

<Latex displayMode={true}>  $ [( \lfloor i_c / ts \rfloor * ts, ( \lfloor i_c / ts \rfloor) * ts + ts)) $</Latex>

In the USDC-WETH example we get:

<Latex displayMode={true}>  $ [\lfloor 202919 / 10 \rfloor * 10, \lfloor 202919 / 10 \rfloor * 10 + 10)) $</Latex>

<Latex displayMode={true}>  $ [\lfloor 20291.9 \rfloor * 10, \lfloor 20291.9 \rfloor * 10 + 10)) $</Latex>

<Latex displayMode={true}>  $ [20291 * 10, 20291 * 10 + 10) $</Latex>

<Latex displayMode={true}>  $ [202910, 202920) $</Latex>

Thus, the current `tick-range` of in-range liquidity for the USDC-WETH pool is currently <Latex>  $ [202910, 202920) $</Latex>, but what prices does this `tick-range` map to? Its maps to

<Latex displayMode={true}>  $ [1.0001^&#123;202910&#125;, 1.0001^&#123;202920&#125;) = [648378713.2500573, 649027383.8115474) $</Latex>

Let's convert to `tick-range` in terms of adjusted <Latex> $ \frac&#123;USDC&#125;&#123;WETH&#125; $</Latex>  as done previously. Remember that we need to adjust for the decimal differences between USDC and WETH, and invert the price since we want <Latex> $ \frac&#123;USDC&#125;&#123;WETH&#125; $</Latex> (the amount of USDC given by 1 WETH) not <Latex> $ \frac&#123;WETH&#125;&#123;USDC&#125; $</Latex> (the amount of WETH given by 1 USDC).

<Latex displayMode={true}>  $ 1 / ([648378713.2500573, 649027383.8115474)  / 10^&#123;12&#125;) $</Latex>

<Latex displayMode={true}>  $ 1 / [0.0006483787133, 0.0006490273838) $</Latex>

<Latex displayMode={true}>  $ [1542.30, 1540.76) $</Latex>

The price we calculated from `sqrtPriceX96` in the previous example falls between this range - a good sanity check that we've calculated the price ranges properly![^7]

[^7]: Notice that the larger price is now first. That is because of the inverting of the exchange rate. This can cause a lot of confusion and problems with code!

## How does tick and tick spacing relate to sqrtPriceX96?
You may be asking, if <Latex> $ price = 1.0001^{202919} $</Latex> (the current tick of the pool) and <Latex> $ price = 649004842.70137 $</Latex> (derived from the sqrtPriceX96 of the pool) then why does <Latex> $ price = 1.0001^{202919} = 648962487.5642413 \neq 649004842.70137 $</Latex>

Instead of calculating the price using the `tick` value from the `slot0` call, let's derive it from the `sqrtPriceX96` value and see where the discrepancy between the current `tick` and `sqrtPriceX96` lies.

We know that <Latex> $ price = 1.0001^&#123;i_c&#125; $</Latex>, then 

<Latex displayMode={true}>  $ 649004842.70137 = 1.0001^&#123;i_c&#125; $</Latex>

<Latex displayMode={true}>  $ \log(649004842.70137) = \log(1.0001^&#123;i_c&#125;) $</Latex>

<Latex displayMode={true}>  $ \log(649004842.70137) = i_c\log(1.0001) $</Latex>

<Latex displayMode={true}>  $ \frac&#123;\log(649004842.70137)&#125;&#123;\log(1.0001)&#125; = i_c $</Latex>

<Latex displayMode={true}>  $ 202919.6526706078 = i_c $</Latex>

This explains why using ticks can be less precise than `sqrtPriceX96` in Uniswap v3. 

Just like ticks can be in between initialized ticks, ticks can also be in-between integers as well! The protocol itself reports the floor <Latex> $ \lfloor i_c \rfloor $</Latex> of the current tick, which the `sqrtPriceX96` retains. 

### Example Tick to Price
```js
let price0 = (1.0001**tick)/(10**(Decimal1-Decimal0))
let price1 = 1 / price0
```

### Example sqrtPriceX96 to Tick
**Note:** the Math.floor as stated above, the calculation will have decimals, not needed for tick

```js
const Q96 = JSBI.exponentiate(JSBI.BigInt(2), JSBI.BigInt(96));
let tick = Math.floor(Math.log((sqrtPriceX96/Q96)**2)/Math.log(1.0001));
```

# Conclusion

Overall, we hope that this long primer on Uniswap v3 is helpful. Helping our community gracefully and efficiently understand Uniswap v3 will help push along the ecosystem to be the best that it can be. For anything else, feel free to join the dev-chat in our [discord](https://discord.gg/vcZv8DbbE3) and ask.

Read part 2 [here](https://blog.uniswap.org/uniswap-v3-math-primer-2).

---

## Related References

1. [Liquidity Math in Uniswap v3](https://atiselsts.github.io/pdfs/uniswap-v3-liquidity-math.pdf) by Atis Elsts
2. [Uniswap v3 Development Book](https://uniswapv3book.com/) by Ivan Kuznetsov
3. [Uniswap v3 Core](https://uniswap.org/whitepaper-v3.pdf) by the Uniswap Labs' team
4. [Uniswap v3 - New Era of AMMs?](https://www.youtube.com/watch?v=Ehm-OYBmlPM) By Finematics

The math for Uniswap v3 can be confusing. This guide answers some of our most common questions, including Q Notation, ticks, exchange rates, and more!

A Primer on Uniswap v3 Math: As Easy As 1, 2, v3

Over the past four years, the Uniswap Protocol has become an essential building block for DeFi applications to source liquidity from a secure, trustless, and efficient AMM. As the most popular DEX on Ethereum, the Uniswap Protocol supports a vibrant ecosystem of builders. We're launching a new series of blog posts featuring these teams, starting with [Arrakis Finance](https://www.arrakis.finance/).

Arrakis lowers the learning curve for market makers with tools to manage concentrated liquidity positions on Uniswap v3. Let's learn more from [Kassandra](https://twitter.com/kassandraETH), founder and CTO of Arrakis Finance.

### What problems are you solving with Arrakis?
**[Kassandra](https://twitter.com/kassandraETH)**: While traditional AMMs are simple and easy to use, they lack capital efficiency as liquidity providers cannot devise and carry out strategies that decide how and when their inventory should be sold. Concentrated liquidity AMMs like Uniswap v3 improve capital efficiency, but at the cost of greater complexity. Arrakis provides the best of both worlds - greater capital efficiency without sacrificing ease of use.

Arrakis is a trustless market-making infrastructure protocol to run sophisticated algorithmic strategies on Uniswap v3. Liquidity providers can utilize Arrakis Vaults to manage their liquidity in an automated, capital-efficient, non-custodial, and transparent manner.

### How does it work?
**[Kassandra](https://twitter.com/kassandraETH)**: A key primitive to Arrakis is its vaults. We recently launched [Arrakis v2](https://mirror.xyz/0x916563f8476b988855af0b8b8A3D56072E1917FA/dDECIZ2xM5EUolG5Lrkrk5XyXgUrfrnaboDDuGYXXBg), which encodes vaults with several [features](https://resources.arrakis.fi/arrakis-v2-protocol/key-features), such as:

- **Multiple Concentrated Liquidity Positions**: Construct any arbitrary combination of liquidity positions in a Uniswap v3 pool.
- **Cross Fee Tier Vaults**: Enables liquidity provision across different fee tiers.
- **Fully Fungible**: Wrapped using the ERC20 token standard, Arrakis vaults are composable with other DeFi protocols.
- **Non-custodial**: Liquidity can only be withdrawn by the original depositor.

### Can you give us an example?
**[Kassandra](https://twitter.com/kassandraETH)**: Certainly! Arrakis is extremely versatile. Virtually any strategy can be implemented on it.

Take a pair of pegged assets, like USDC/DAI. Because most trades happen close to the peg, we'd want to deploy liquidity at the 0.01% fee tier. But, if the asset depegs, we may want to provide liquidity at higher fee tiers to compensate ourselves for any additional risk we incur in providing liquidity to a depegged asset.

![arrakis ex](//images.ctfassets.net/oc3ca6rftwdu/4QgVJ5LYMd6nZqbFYAvg6b/e80b9f3b1f3f33ce4851ab16dca29421/arrakis_ex.png)

### Why did you choose to build on Uniswap v3?
**[Kassandra](https://twitter.com/kassandraETH)**: We saw Uniswap v3 as a massive breakthrough for AMM design with all sorts of unexplored implications and possibilities. Uniswap v3 introduced the concept of concentrated liquidity to the AMM, which adds key features to massively amplify the capital efficiency of liquidity pooled -- but also creates a trade-off whereby LPs needed to be much more sophisticated by setting and adjusting custom price bands to concentrate their liquidity within.

Arrakis was born as a response to this trade-off, hoping to make best-in-class liquidity provision strategies accessible to all, even those who aren't necessarily experts on market making. At Arrakis, we have a lot of respect for and belief in the Uniswap v3 protocol. We think it's fascinating, and we hope our tools help the protocol grow and mature.

### How was building on top of the Uniswap Protocol?
**[Kassandra](https://twitter.com/kassandraETH)**: Building on top of Uniswap v3 can be enjoyable and rewarding, but it is not for the faint of heart. In the early stages of development with Uniswap v3 we encountered some issues with Solidity v0.8+, but the Uniswap team helped us solve them. The documentation, especially the NATSPEC in contracts, was very helpful. While we don't use the SDK frequently, we have found it useful as a reference when creating our projects. Despite its increased complexity compared to previous versions, the wide range of potential applications it unlocks makes the complexity worthwhile.

### Where can we learn more about Arrakis?
__[Kassandra](https://twitter.com/kassandraETH)__: Check our [documentation](https://resources.arrakis.fi/), [Arrakis v2](https://mirror.xyz/0x916563f8476b988855af0b8b8A3D56072E1917FA/dDECIZ2xM5EUolG5Lrkrk5XyXgUrfrnaboDDuGYXXBg) announcement, [PALM](https://mirror.xyz/0x916563f8476b988855af0b8b8A3D56072E1917FA/wC6L4XJdmuBCXNB1XHBGzCbzxIKvVTdiSoSgDqHWF6I) announcement, and the [app](https://arrakis.finance/) itself!

# Start Building on Uniswap Today!
Inspired to build the next great innovation in DeFi? Uniswap Labs offers tooling and resources to get building fast!

- Add swapping to any React website in less than 5 minutes with the [Uniswap Widget](https://docs.uniswap.org/sdk/widgets/swap-widget)
- Build a dApp or integrate an existing dApp with the Uniswap Protocol using our [Javascript SDK](https://docs.uniswap.org/sdk/introduction)
- Build on chain contracts that can [swap](https://docs.uniswap.org/protocol/guides/swaps/single-swaps), [provide liquidity](https://docs.uniswap.org/protocol/guides/providing-liquidity/setting-up), and [get prices](https://docs.uniswap.org/concepts/protocol/oracle) in a fully permissionless way by integrating with the [Uniswap Protocol Smart Contracts](https://docs.uniswap.org/contracts/v3/overview)
- Join our [Discord](https://discord.gg/cfWtaJVwsg) and head over to our developer specific #dev-chat channel for help getting started

Should we write about your project? **[Submit this form here](https://notionforms.io/forms/uniswap-ecosystem-projects-1)!**

***

_Disclaimer: Arrakis is a Uniswap Labs Ventures portfolio company. Certain information contained here has been obtained from third-party sources, including from portfolio companies of Uniswap Labs. While taken from sources believed to be reliable, Uniswap Labs has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; Uniswap Labs has not reviewed such advertisements and does not endorse any advertising content contained therein._

_None of the information herein should be construed as or relied upon in any manner as investment, legal, tax, or other advice. Any products and services referenced may not be suitable for users in all jurisdictions. You should consult your own advisers as to legal, business, tax, and other related matters concerning any usage, participation, or investment. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Any charts provided here or on Uniswap Labs content distribution outlets are for informational purposes only and should not be relied upon when making any usage, participation, or investment decision. All content speaks only as of the date indicated._

_Under no circumstances should any posts or other information provided on this website --- or on associated content distribution outlets --- be construed as an offer soliciting the purchase or sale of any security, or interest in any pooled investment vehicle, or as an offer to provide investment advisory services by Uniswap Labs personnel._

_More information about Uniswap Labs Ventures is available [here](https://uniswap.org/blog/ventures)._

Learn how liquidity providers can use Arrakis to manage their Uniswap v3 liquidity positions in an automated, capital-efficient, non-custodial, and transparent manner.

Arrakis - Trustless Market Making Strategies on Uniswap v3

Build your first on chain integration with the Uniswap Protocol

Building Your First Uniswap Integration

We believe users should access Web3 on chains with properties that are important to them. That’s why we’re excited the Uniswap community [voted to deploy v3 on Polygon](https://app.uniswap.org/#/vote/2/10) – just as [the community suggested Arbitrum](https://gov.uniswap.org/t/deploy-uniswap-v3-to-arbitrum-mainnet/12451) earlier last year. The Polygon deployment is the 4th chain for v3 after Mainnet, Optimism, and Arbitrum and has given users access to even faster transactions, even lower gas fees, and more applications. As the community considers deploying to additional networks, we want to share some lessons learned and thoughts on cross-chain deployments.

We believe that community members should be able to more easily signal support for, and approve, cross-chain Uniswap Protocol deployments. So today, we have publicly released the [deployment script and documentation](https://github.com/Uniswap/deploy-v3#deploy-uniswap-v3-script) outlining how to deploy Uniswap Protocol v3 to other chains. (The Uniswap Labs team is available to answer technical questions in the governance forum and in our weekly Developer Office Hours soon) We’ve also [proposed simplifications of the community governance process](https://gov.uniswap.org/t/proposed-revisions-to-the-uniswap-governance-process/15906) that can guide future cross-chain proposals from the community. And we’re exploring the UI to create proposals to make adding exemptions to the v3 license file easier. We welcome input and feedback on these suggested simplifications.

When evaluating a Uniswap v3 deployment, we encourage the community to pay close attention to the security and trust assumptions of the bridge being used to relay governance to that chain. Uniswap Governance contracts live on L1 Ethereum, so when the Protocol is deployed to a new network, UNI holders need a bridge contract to govern the Protocol on that network. Few networks offer general trust-minimized bridges that support arbitrary message passing. Without those bridges, the Uniswap community would rely on either trusted bridges or multi-sigs to handle governance updates, which could affect the Protocol’s existing security guarantees.

We expect cross-chain experiences to play a large part in growth and user experience improvement this year. As the multi-chain world continues to develop, more bridges will be developed or updated to support bridging governance actions from Ethereum Mainnet. We’re excited to see where the community takes the Protocol next.

Strengthening the community-driven approach to cross-chain deployment

Multichain Uniswap

Developing tools to strengthen DAO governance is critical to robust decentralization. Today, we’re excited to share a new effort toward that goal. In collaboration with Scopelift, we are releasing [Seatbelt](https://github.com/Uniswap/governance-seatbelt), a test suite for governance proposals. Seatbelt can be used by any DAO using Governor Bravo, the governance contracts facilitating DAOs like Uniswap and Compound Protocols. This initial release includes several basic checks (listed below) and generates reports on proposals prior to votes for the Community’s review so that delegates and token-holders have the critical information they need for their decisions. Over time, through collaboration with the Uniswap Protocol community and other communities that can benefit from its development, we hope Seatbelt becomes more comprehensive.

When the Uniswap Protocol DAO upgraded to Governor Bravo last August, a minor bug was found and fixed. We wrote about it [here](https://twitter.com/haydenzadams/status/1432496726779256832).
There was no impact to the Protocol or DAO, but it was an important reminder that governance proposals are often one-way paths and require more infrastructural support to back up security reviews.

At launch, Seatbelt will check Ethereum for new proposals every hour, run a series of checks on all active proposals and publish reports in a GitHub repo for anyone to review. For example, a Seatbelt report on Compound proposal 80 can be found [here](https://github.com/Uniswap/governance-seatbelt/blob/reports/Compound/0xc0Da02939E1441F497fd74F78cE7Decb17B66529/80.md).

These checks will:

- List all referenced addresses - any address that’s touched by this proposal’s execution
- Confirm all contracts referenced by the proposal are verified on Etherscan
- List all state changes and events resulting from the proposal execution

Soon, through continued collaboration, we hope that Seatbelt will also support:

- Showing compiler warnings in referenced contracts
- Results from running static analysis tools against the verified smart contracts
- Simulating proposals locally to identify issues before proposals are submitted on chain

We look forward to working with the Uniswap Community and other communities to continue to improve DAO governance.


Introducing Governance Seatbelt, a tool for safer and more informed governance proposals

Adding a “Seatbelt” to Secure Governance Proposals

Today, we're incredibly excited to share proposed new branding for the Uniswap Protocol.

And, over the coming week, we’ll be hosting a community call to discuss the creative process and also soliciting feedback through the governance forum.

# Visually Distinguishing Labs from Protocol

Since its inception, the unicorn logo has been a steadfast marker of the spirit of Uniswap. But as the Uniswap ecosystem has grown, the need for a more robust graphic toolkit to express and distinguish the ecosystem’s many facets has become apparent.

In particular, separate visual identities will clarify the distinction between the Uniswap Protocol and Uniswap Labs to the Uniswap community and external observers, further defining the function, responsibilities, and governance of each. The two are sometimes confused with each other, but in practice they are entirely separate things: the Uniswap Protocol is the set of on-chain, immutable smart contracts that facilitate peer-to-peer trading, while Uniswap Labs refers to the software development studio that builds and maintains products generally adjacent to the Protocol. Uniswap Labs is one of hundreds of companies that builds products on top of the Protocol and may someday build products further afield from the Protocol.

# Designing a new mark

Graphic designer Timothy Luke, who worked with Uniswap Grants to develop its logo system, drew the new Protocol mark. His ornate, futuristic sensibility felt like the perfect fit for depicting a crypto-powered unicorn.

The final logo-set consists of 4 variations based on size:

![brand-update-protocol](//images.ctfassets.net/oc3ca6rftwdu/5jiPPBCbbmesOh0HShPZ6J/334ab64df91c51fdd378086090ee2fe9/protocol.png)

Luke also developed a mark for Uniswap Labs, using the atomic parts of the glimmer and shield. Compared to the ornate unicorn logo, the mark for Labs is more neutral, representing an organization that has a connection to, but is separate from, the Protocol.

![brand-update-labs](//images.ctfassets.net/oc3ca6rftwdu/78ntmOxiNIZKYV6ofYdHp9/720b774320ec289a7dd4940c7677c801/labs.png)

The final result is a cohesive system of marks that symbolizes the relationship between Uniswap Protocol, Uniswap Labs, and Uniswap Grants Program. We’re blown away by the vision Luke has brought to life, and we hope you’re just as excited.

![brand-update-family](//images.ctfassets.net/oc3ca6rftwdu/6Q6ZtTAELln2J32ScRu5Kv/41c360f332d259e5d5ac3fc98b824d2d/family.png)

# An on-chain brand

We are taking steps to be the first organization to bring their brand fully on chain.

Once the community has settled on branding, the Protocol logos will be generated as NFTs and sent to the Uniswap governance treasury. Community members may use the logos as they see fit under the rights set out by Uniswap Labs’ [Trademark Guidelines](https://uniswap.org/trademark).

# Request for Comment

The Uniswap community is invited to contribute comments and propose changes to the redesign before it goes live through a thread on the Governance forum.

On Wednesday, November 10th at 1pm ET, the Labs design team will share a presentation, describing the inspiration for the new branding and providing additional context on the creative process, before opening up the floor to community discussion. (Details for the presentation call will be posted on the Uniswap Labs Twitter account and in the governance forum thread.)

We’re thrilled to share these updates and look forward to hearing your thoughts over the coming week.

Details for community feedback can be found on the [forum post](https://gov.uniswap.org/t/uniswap-protocol-brand-update-request-for-comment/14822).

---

To get involved and stay up to date:

- Join the Uniswap community [discord](https://discord.com/invite/FCfyBSbCU5)
- Follow Uniswap Labs on [Twitter](https://twitter.com/Uniswap)
- Subscribe to the Uniswap Labs [blog](https://uniswap.org/rss.xml)
- Register as a delegate on [Sybil](https://sybil.org/#/delegates/uniswap)
- Participate in Uniswap [governance](https://gov.uniswap.org/)

Uniswap Team
🦄

Uniswap Brand Update, an overview of the new Uniswap brand.

Uniswap Brand Update

Today we’re excited to announce that the Arbitrum network is [open to the public](https://arbitrum.io/) — users can now trade on the Arbitrum deployment of Uniswap v3 with low gas costs and instant transaction confirmations!

As DeFi adoption continues to ramp up, bringing scalability to Ethereum has become more necessary than ever. Thankfully, Layer 2 solutions like Arbitrum have the potential to provide additional bandwidth without sacrificing the ideals of decentralization and security that we value so highly.

During this initial launch, Arbitrum will support throughput of 80k arb gas per second, which should translate to transaction capacity roughly in line with Layer 1. Unlike L1, transactions on Arbitrum confirm instantly — no more pending or stuck swaps!

# Launch Details

Users can start migrating assets over to the Arbitrum network through the [Arbitrum Bridge](https://bridge.arbitrum.io/) by following this [user guide](https://support.uniswap.org/hc/en-us/articles/11316824767757-How-to-deposit-tokens-to-Arbitrum-). Arbitrum is immediately compatible with popular wallets (Metamask, WalletConnect), as well as analytics services, [Arbiscan](https://arbiscan.io/) and The Graph. Uniswap Protocol activity on Arbitrum can be tracked at [info.uniswap.org/#/arbitrum](https://info.uniswap.org/#/arbitrum).

Please treat this as an early alpha product! As a new piece of software, the Arbitrum network is still in need of rigorous battletesting, as Offchain Labs has [noted](https://offchain.medium.com/mainnet-for-everyone-27ce0f67c85e). At launch, the Arbitrum team will have upgrade rights over the bridge contract, allowing them to address any issues that may arise. While fraud proofs are up and running, at the outset there is a whitelist of validators who may submit proofs.

A few additional Alpha launch features to be aware of:

- **Downtime**: The Arbitrum team does not have any planned downtime, but it is possible that the network encounters unplanned outages as usage increases and the protocol stabilizes. In the event of an unplanned outage, transactions will cease to be confirmed and Uniswap Protocol LPs will not earn trading fees to compensate for their price exposure.

- **Withdrawal times**: Deposits from Ethereum L1 to the Arbitrum network will take as long as a standard Ethereum transaction, while withdrawals will take 7 days in order to account for the challenge period. However, for select assets and a minor fee, users can opt for fast exits using third party services like Hop Protocol.

- **Available assets**: At launch, the Arbitrum network supports [33 assets](https://bridge.arbitrum.io/token-list-42161.json), including USDC, WETH, and WBTC. Additional tokens will be added to the network on an ongoing basis.

- **TWAP Oracles**: The Arbitrum sequencer introduces an additional trust assumption for developers using v3 price feeds. More information on the Arbitrum sequencer can be [found here](https://developer.offchainlabs.com/docs/inside_arbitrum#sequencer-mode).

- **Composability**: Arbitrum supports full composability. As of today, anyone can deploy a smart contract to Arbitrum mainnet! A list of Arbitrum ecosystem projects can be [found here](https://portal.arbitrum.one/).

While these are still relatively early days and scaling will be an iterative process, we’ve never been more confident that the industry is moving in the right direction!

---

To get involved and stay up to date:

- Join the Uniswap community [discord](https://discord.com/invite/FCfyBSbCU5)
- Follow Uniswap Labs on [Twitter](https://twitter.com/Uniswap)
- Subscribe to the Uniswap Labs [blog](https://uniswap.org/rss.xml)
- Register as a delegate on [Sybil](https://sybil.org/#/delegates/uniswap)
- Participate in Uniswap [governance](https://gov.uniswap.org/)

Uniswap Team
🦄

Uniswap on Arbitrum (Alpha Launch)

Almost two years after our [Unipig](https://unipig.exchange/) proof of concept, we are finally ready to announce the Alpha launch of Uniswap v3 on the [Optimistic Ethereum](https://www.optimism.io/) (OΞ) mainnet!

Today's launch marks the first step in the journey for DeFi applications to rival and surpass traditional web user experiences. Optimism's roadmap promises further powerful improvements including additional scaling, smart wallet EOAs (no &quot;approves&quot;, pay gas in any token), and decentralization of the transaction sequencing operation.

During this Alpha period, OΞ will support an initial throughput of 0.6 transactions per second. Because Uniswap v3 is currently one of the few protocols deployed to OΞ, this should translate to transaction capacity roughly in line with L1. Unlike L1, transactions on OΞ confirm instantly — **no more pending or stuck swaps**!

Assuming Uniswap v3 sees equal usage to L1, **OΞ should offer up to 10x transaction cost savings**. Additional demand will drive gas costs higher — for more details, check out Optimism's blog post. **Transaction speeds will ramp up over the coming weeks and months** as the OΞ infrastructure is tested and optimized at scale, with the end goal of scaling to fully meet demand for low cost, high speed DEX trading.

For more information on how Optimistic Ethereum works and its security model, check out this [blog post](https://research.paradigm.xyz/rollups).

![swap](//images.ctfassets.net/oc3ca6rftwdu/2CPmxECzQmaEOB7cNjOXNR/71d28b453f75b038810f3b378ecc6457/swap.gif)

# Launch Details

Users can start migrating assets over to the Optimism Ethereum network through the [Optimism Gateway](https://gateway.optimism.io/). A detailed user guide is available [here](https://support.uniswap.org/hc/en-us/articles/7423939615629-How-to-deposit-tokens-to-Optimism). Optimism is already compatible with popular wallets (Metamask, WalletConnect), Etherscan, and The Graph. Analytics can be tracked at [info.uniswap.org/#/optimism/](https://info.uniswap.org/#/optimism/).

**Please treat this as an early alpha product**. Optimistic Ethereum is a complex Layer 2 scaling solution still in need of rigorous battletesting. At launch, the Optimism team will have upgrade rights over the bridge contract, allowing them to address any bugs that should arise.

There are a few more Alpha launch features to be aware of:

- **Downtime:** There will be downtime (both planned and likely unplanned) during the early days of OΞ, during which LPs will not earn trading fees to compensate for price exposure. We will communicate scheduled downtime ahead of time through social media channels.

- **Withdrawal Times:** Deposits from Ethereum L1 to Optimistic Ethereum are instant. However, until fast withdrawal services are made available, withdrawals from OΞ to L1 will take 7 days.

- **Select Assets:** Uniswap v3 can support any ERC20 token on OΞ, but will offer a limited number of assets at launch (ETH, USDT, WBTC, DAI, SNX). More tokens will be bridged to Optimistic Ethereum over the coming days and weeks.

- **TWAP Oracles:** The Optimism sequencer introduces an additional trust assumption for developers using v3 price feeds.

- **Composability:** OΞ supports full composability. However, at launch, the network does not permit arbitrary smart contract deployment. Reach out to the Optimism team on Discord if you would like to deploy your contracts on OΞ.

Scaling Ethereum will be an iterative process, but this is a major step forward. Optimistic Rollups and ETH 2.0 are complementary scaling solutions and together will propel DeFi to mainstream adoption.

---

To get involved and stay up to date:

- Join the Uniswap community [discord](https://discord.gg/FCfyBSbCU5)
- Follow Uniswap on [Twitter](https://twitter.com/Uniswap)
- Subscribe to the Uniswap [blog](https://uniswap.org/blog)
- Register as a delegate [Sybil](http://sybil.org/)
- Participate in [Uniswap governance](http://gov.uniswap.org/)

Uniswap Team
🦄

Uniswap v3, the third iteration of the Uniswap protocol, has been deployed to the Optimism mainnet!

Uniswap on Optimism


We're thrilled to announce that Uniswap v3 has been deployed to the Ethereum mainnet! All relevant contract addresses can be found [here](https://github.com/Uniswap/uniswap-v3-periphery/blob/main/deploys.md).

Uniswap v3 is the most powerful version of the protocol yet, with Concentrated Liquidity offering unprecedented capital efficiency for liquidity providers, better execution for traders, and superior infrastructure at the heart of decentralized finance.

For a full description of v3's features, please refer to our announcement [blog pos](https://uniswap.org/blog/uniswap-v3/)[t](https://uniswap.org/blog/uniswap-v3/). Audit reports for the core and periphery contracts can be found [here](https://github.com/Uniswap/uniswap-v3-core/tree/main/audits) and [here](https://github.com/Uniswap/uniswap-v3-periphery/tree/main/audits/abdk). After 6 weeks, the Uniswap v3 bug bounty has returned no major findings. However, we would like to note that v3 is a complex new protocol and we cannot guarantee all bugs have been found and resolved.

# Traders
The swap interface now routes trades through Uniswap v3 and will alert you when a better exchange rate is available on Uniswap v2.

The Uniswap analytics platform — [info.uniswap.org](https://info.uniswap.org) — now tracks v3 performance. You can continue to review [v2 stats](http://v2.info.uniswap.org/) here.

# Liquidity providers

The pool interface now supports the creation of Uniswap v3 positions with multiple fee tiers and concentrated liquidity ranges. Each position is represented as an NFT and comes with a unique piece of on-chain generative art. Look out for rare sparkles!

![NFT1](//images.ctfassets.net/oc3ca6rftwdu/3ym1i9ficLAGAQMghk5evu/d50a5d5b354dc79e1f2c80518cf64102/NFT1.gif)

We have also released a migration portal for Uniswap v2 and Sushiswap LPs to seamlessly migrate their assets over to v3. Due to the introduction of concentrated liquidity, the migration portal requires LPs to specify a fee tier and price range for their allocated liquidity. A migration walkthrough guide can be found [here](https://support.uniswap.org/hc/en-us/articles/7423351004173-Migrate-Liquidity-from-Uniswap-V2-to-V3).

# Developers

Developers can begin building on Uniswap v3 immediately!

Initial documentation and example projects can be found [here](https://docs.uniswap.org/contracts/v3/overview). Additionally, the Uniswap Labs team will be available to answer integration-related questions in our Discord's #integrations channel.

# Contact

The Uniswap Labs team will be available to answer questions in the Uniswap community Discord.

Follow the [Uniswap Labs Twitter account](https://twitter.com/uniswap) for more updates!

# FAQ:

**1. What happens to the Uniswap v2 protocol?**

The Uniswap v2 Protocol will remain functional and available for use as long as the Ethereum network continues to exist. However, we expect that over time the advantages of Uniswap v3 will draw a majority of liquidity and trading volume away from v2.

**2. Do I have to migrate my liquidity?**

You are not required to migrate your v2 liquidity if you so choose. The Uniswap v2 protocol will remain active and functional in perpetuity. However, it may be advantageous to migrate liquidity as we expect a majority of trading volume — and, consequently, LP fee generation — to take place on v3.

**3. Will the updated Uniswap interface only execute trades through v3?**

The updated interface will default to executing on v3 but will always alert you if a better trade is available on v2.

**4. Is there a v3 liquidity mining program?**

There is no v3 liquidity mining program scheduled at launch. Uniswap governance may introduce a liquidity mining program at any time through the standard Uniswap governance process.

---

To get involved and stay up to date:

- Join the Uniswap community [discord](https://discord.gg/FCfyBSbCU5)
- Follow Uniswap on [Twitter](https://twitter.com/Uniswap)
- Subscribe to the Uniswap [blog](/blog)
- Register as a delegate [Sybil](http://sybil.org/)
- Participate in [Uniswap governance](http://gov.uniswap.org/)

Uniswap Team
🦄

Uniswap v3, the third iteration of the Uniswap protocol, has been deployed to the Ethereum mainnet!


Uniswap v3 Mainnet launch

Uniswap v1 was launched in November 2018 as a proof of concept for automated market makers (AMMs), a type of exchange where anyone can pool assets into shared market making strategies.

In May 2020, Uniswap v2 introduced new features and optimizations, setting the stage for exponential growth in AMM adoption. Less than one year since its launch, v2 has facilitated over $135bn in trading volume, ranking as one of the largest cryptocurrency spot exchanges in the world.

Uniswap now serves as critical infrastructure for decentralized finance, empowering developers, traders, and liquidity providers to participate in a secure and robust financial marketplace.

Today, we are excited to present an overview of Uniswap v3. We are targeting an **L1 Ethereum mainnet launch on May 5**, with an **L2 deployment on Optimism set to follow shortly after.**

Uniswap v3 introduces:

- **Concentrated liquidity,** giving individual LPs granular control over what price ranges their capital is allocated to. Individual positions are aggregated together into a single pool, forming one combined curve for users to trade against

- **Multiple fee tiers**, allowing LPs to be appropriately compensated for taking on varying degrees of risk

These features make Uniswap v3 **the most flexible and efficient AMM ever designed**:

- LPs can provide liquidity with **up to 4000x capital efficiency** relative to Uniswap v2, earning **higher returns on their capital**

- Capital efficiency paves the way for low-slippage **trade execution that can surpass both centralized exchanges and stablecoin-focused AMMs**

- LPs can significantly **increase their exposure to preferred assets** and **reduce their downside risk**

- LPs can sell one asset for another by adding liquidity to a price range entirely above or below the market price, approximating **a fee-earning limit order that executes along a smooth curve**

Uniswap's **oracles are now far easier and cheaper to integrate**. V3 oracles are capable of providing time-weighted average prices (TWAPs) on demand for any period within the last ~9 days. This removes the need for integrators to checkpoint historical values.

Even with these groundbreaking design improvements, the **gas cost of v3 swaps on Ethereum mainnet is slightly cheaper than v2**. Transactions made on the Optimism deployment will likely be _significantly_ cheaper!

Read on for more details on Uniswap v3. For a deeper technical overview check out the [Uniswap v3 Core whitepaper](https://uniswap.org/whitepaper-v3.pdf), the [Uniswap v3 Core smart contracts](https://github.com/Uniswap/uniswap-v3-core/).

# Concentrated Liquidity

In Uniswap v2, liquidity is distributed evenly along an x*y=k price curve, with assets reserved for all prices between 0 and infinity. For most pools, a majority of this liquidity is never put to use. As an example, **the v2 DAI/USDC pair reserves just ~0.50% of capital for trading between $0.99 and $1.01** , the price range in which LPs would expect to see the most volume and consequently earn the most fees.

V2 LPs only earn fees on a small portion of their capital, which can fail to appropriately compensate for the price risk (&quot;impermanent loss&quot;) they take by holding large inventories in both tokens. Additionally, traders are often subject to high degrees of slippage as liquidity is spread thin across all price ranges.

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.

<Video source="//videos.ctfassets.net/oc3ca6rftwdu/6ADCXiL0UNmaPBaTRYfK2k/5d62b8abec781f72982832521f2787ee/CYL.mp4" description=" " />

LPs can combine any number of distinct concentrated positions within a single pool. For example, an LP in the ETH/DAI pool may choose to allocate $100 to the price ranges $1,000-$2,000 and an additional $50 to the ranges $1,500-$1,750.

By doing so, an LP can approximate the shape of any automated market maker or active order book.

**Users trade against the combined liquidity of all individual curves** with no gas cost increase per liquidity provider. Trading fees collected at a given price range are split pro-rata by LPs proportional to the amount of liquidity they contributed to that range.

<Video source="//videos.ctfassets.net/oc3ca6rftwdu/3YJ1gqlBEhKlAQa5IFFwCv/f6494742c4277eae7f7bf7d2b9adfd74/IS.mp4" description=" " />

## Capital Efficiency

By concentrating their liquidity, LPs can provide **the same liquidity depth as v2 within specified price ranges while putting far less capital at risk.** The capital saved can be held externally, invested in different assets, deposited elsewhere in DeFi, or used to increase exposure within the specified price range to earn more trading fees.

<Video source="//videos.ctfassets.net/oc3ca6rftwdu/3RwaD00mfHKaBJ9Vy8EiJI/cf1cb7b25bacf5aa8112f99eb54a23d0/MFFL.mp4" description=" " />

Let's illustrate with an example:

Alice and Bob both want to provide liquidity in an ETH/DAI pool on Uniswap v3. They each have $1m. The current price of ETH is 1,500 DAI.

Alice decides to deploy her capital across the entire price range (as she would have in Uniswap v2). She deposits 500,000 DAI and 333.33 ETH (worth a total of $1m).

Bob instead creates a concentrated position, depositing only within the price range from 1,000 to 2,250. He deposits 91,751 DAI and 61.17 ETH, worth a total of about $183,500. He keeps the other $816,500 himself, investing it however he prefers.

While Alice has put down 5.44x as much capital as Bob, _they earn the same amount of fees_, as long as the ETH/DAI price stays within the 1,000 to 2,250 range.

![example 1](//images.ctfassets.net/oc3ca6rftwdu/pgajcrSvF51NZo6WQ7QMT/aa4dc1497cab699f5b5747e69160d9c5/example_1.png)

Bob's custom position also acts as a kind of stop-loss for his liquidity. Both Alice and Bob's liquidity will be entirely denominated in ETH if the price of ETH falls to $0. However, Bob will have lost just $159,000, versus Alice's $1m. Bob can use his additional $816,500 to hedge against downside exposure or to invest in any other conceivable strategy.

![example 2](//images.ctfassets.net/oc3ca6rftwdu/7fJVwfL5ZEqwsfiAH6JvCV/74dcdb9c8d2500547e7bd1df272a14da/example_2.png)

Instead of providing equivalent liquidity depth as a v2 LPs with less capital, v3 LPs can choose to provide **greater depth with the same amount of capital** as their v2 counterparts. This requires **taking on more price risk** (&quot;impermanent loss&quot;) while supporting greater amounts of trading and earning higher fees.

LPs in more stable pools will likely provide liquidity in particularly narrow ranges. If the ~$25m currently held in the Uniswap v2 DAI/USDC pair was instead concentrated between 0.99 — 1.01 in v3, it would provide the same depth as $5bn in Uniswap v2 as long as the price stayed within that range. **If the ~$25m was concentrated into the 0.999 - 1.001 range it would provide the same depth as $50b in Uniswap v2.**

The tool below calculates the capital efficiency gains of a concentrated liquidity position (centered around the current price) relative to allocating capital across the entire price curve.

<Simulator />

At launch, capital efficiency gains will max out at 4000x for LPs providing liquidity within a single 0.10% price range. The v3 pool factory is technically capable of supporting ranges as granular as 0.02%, translating to a maximum 20,000x capital efficiency gains relative to v2. However, more granular pools can increase swap gas costs and might be more useful on Layer 2.

## Active Liquidity

If market prices move outside an LP's specified price range, their liquidity is effectively removed from the pool and is no longer earning fees. In this state, an LP's liquidity is composed entirely of the less valuable of the two assets, until the market price moves back into their specified price range or they decide to update their range to account for current prices.

<Video source="//videos.ctfassets.net/oc3ca6rftwdu/3eer140wA8sBS5YwSLwu41/2fe4d78a28ee2cbc143999e30e8ba8e9/AL.mp4" description=" " />

In v3, it is theoretically possible for no liquidity to exist in a given price range. However, we expect rational LPs to continuously update their price ranges to cover the current market price.

## Range Orders

v3's LP customizability opens up a novel order feature to complement market orders, which we are calling "range orders".

LPs can deposit a single token in a custom price range above or below the current price: if the market price enters into their specified range, they sell one asset for another along a smooth curve while earning swap fees in the process.

Depositing to a narrow range feels similar to a traditional limit order. For example, if the current price of DAI is below 1.001 USDC, Alice could add $10m worth of DAI to the range of 1.001 — 1.002 DAI/USDC.

Once DAI trades above 1.002 DAI/USDC, Alice's liquidity will have fully converted into USDC. Alice must withdraw her liquidity (or use a third-party service to withdraw on her behalf) to avoid automatically converting back into DAI if DAI/USDC starts trading below 1.002.

![range](//images.ctfassets.net/oc3ca6rftwdu/2l33qlFlZ6f1KmeJOZ3rDp/55b6546fa088b619d70dcb3a5a54889d/range.png)

The average execution price of a fully executed range order is the geometric average of the minimum and maximum price: in Alice's case, the execution price equals 1.001499 DAI/USDC for a total of $1,001,499. This execution price does not account for additional swap fees earned during the period in which prices trade within the 1.001 — 1.002 DAI/USDC range.

Range orders within wider ranges may prove particularly useful for **profit-taking, buying the dip,** and **primary issuance events**: in the later use case, issuers are now able to deposit liquidity in a single asset and specify the exact range of prices across which they wish to sell their tokens.

## Non-Fungible Liquidity

As a byproduct of per-LP custom price curves, liquidity positions are no longer fungible and are not represented as ERC20 tokens in the core protocol.

Instead, LP positions will be represented by non-fungible tokens (NFTs). However, common shared positions can be made fungible (ERC20) via peripheral contracts or through other partner protocols. Additionally, trading fees are no longer automatically reinvested back into the pool on LPs' behalf.

Over time we expect increasingly sophisticated strategies to be tokenized, making it possible for LPs to participate while maintaining a passive user experience. This could include multi-positions, auto-rebalancing to concentrate around the market price, fee reinvestment, lending, and more.

# Flexible Fees

Uniswap v3 offers LPs three separate fee tiers per pair — 0.05%, 0.30%, and 1.00%. This array of options ensures that LPs tailor their margins according to expected pair volatility: LPs take on more risk in non-correlated pairs like ETH/DAI and, conversely, take on minimal risk in correlated pairs like USDC/DAI.

Although distinct fee tiers may lead to some degree of liquidity fragmentation, we believe that most pairs will calibrate to an obvious fee tier, which then serves as the canonical market. We expect like-kind asset pairs to congregate around the 0.05% fee tier and pairs like ETH/DAI to use 0.30%, while exotic assets might find 1.00% swap fees more appropriate. governance can add additional fee tiers as needed.

Uniswap v2 introduced a protocol fee switch, which allowed a flat 5 basis point (16.66% of LP fees) fee to be turned on by governance. Uniswap v3 protocol fees are far more flexible. Fees will be off by default, but can be turned on by governance on a per-pool basis and set between 10% and 25% of LP fees.

# Advanced Oracles

Uniswap v2 introduced time weighted average price (TWAP) oracles. These oracles serve as a critical piece of DeFi infrastructure, and have been integrated into dozens of projects, including Compound and Reflexer.

V2 oracles work by storing cumulative sums of Uniswap pair prices on a per-second basis. These price sums can be checked once at the beginning of a period and once at the end to calculate an accurate TWAP over that period.

Uniswap v3 offers significant improvements to the TWAP oracle, making it possible to calculate any recent TWAP within the past ~9 days in a single on-chain call. This is achieved by storing an array of cumulative sums instead of just one.

![oracles](//images.ctfassets.net/oc3ca6rftwdu/645gRZmrsruhM4dXb2obKR/581ef8cb9406de64f2acd27145f1e778/oracles.png)

This array of historical price accumulators makes it far easier and cheaper to create more advanced oracles that include simple-moving averages (SMA), exponential moving averages (EMA), outlier filtering, and more.

Despite this major improvement, the gas cost to Uniswap traders for keeping oracles up to date has been reduced by ~50% relative to v2. The costs for calculating TWAPs in external smart contracts is significantly cheaper as well.

# License

We strongly believe decentralized financial infrastructure should ultimately be free, open-source software. At the same time, we think the Uniswap community should be the first to build an ecosystem around the Uniswap v3 Core codebase.

With this in mind, Uniswap v3 Core will launch under the [Business Source License 1.1](https://github.com/Uniswap/uniswap-v3-core/blob/main/LICENSE)—effectively **a time-delayed GPL-2.0-or-later license**. The license limits use of the v3 source code in a commercial or production setting for up to two years, at which point it will convert to a GPL license into perpetuity.

Uniswap governance can accelerate the change to GPL or grant exemptions to the license at any time by updating the files at _ **v3-core-license-date.uniswap.eth** _ and _ **v3-core-license-grants.uniswap.eth** _.

Note that the BUSL 1.1 license does not affect integrations. **All code that may be needed for external integrations has been licensed under GPL or MIT** , including math libraries, peripheral contracts, interfaces, and the developer sdk. Any wallet, interface, mobile app, protocol, or other project will be able to integrate with v3 as expected.

For more information on this license, see this [FAQ](https://mariadb.com/bsl-faq-adopting/).

# Audits and Bug Bounty

Our team believes security is of the utmost importance — it took hundreds of hours of testing for us to feel comfortable with launching Uniswap v3.

Our security process for v3 included:

- A full-length [audit from Trail of Bits](https://github.com/Uniswap/uniswap-v3-core/blob/main/audits/tob/audit.pdf)
- A full-length [audit from ABDK](https://github.com/Uniswap/uniswap-v3-core/blob/main/audits/abdk/audit.pdf)
- A full audit from [samczsun](https://samczsun.com/) (no report)
- An auditing and review process from our engineering team
- A comprehensive test suite, including the automated tools Echidna and Manticore

Major bugs discovered as part of the testing and auditing process were fixed. However, we would like to note that Uniswap v3 is an extremely complex protocol and we cannot guarantee all bugs have already been discovered and resolved.

To help find any open vulnerabilities, a public bug bounty will run over the next 30 days, with up to $500,000 offered for critical bugs. More detail on the public bug bounty can be found [here](https://github.com/Uniswap/uniswap-v3-core/blob/main/bug-bounty.md).

# Launch Details

The Uniswap v3 smart contracts will be deployed to the Ropsten, Rinkeby, Kovan, and Görli testnets in the coming days, giving developers time to begin experimenting with the protocol before the official launch.

- The [Uniswap v3 Core repository](https://github.com/Uniswap/uniswap-v3-core) contains the essential, low-level smart contracts that power the protocol.

- The [Uniswap v3 Periphery repository](https://github.com/Uniswap/uniswap-v3-periphery) contains a collection of smart contracts designed to ease user interaction with core contracts.

A liquidity provider migration portal will be available at launch, allowing v2 LPs to seamlessly transfer their liquidity to the new protocol.

In the meantime, there are few outstanding items to complete:

- Partners and integrations can begin building on Uniswap v3 immediately, in preparation for mainnet launch!

- The interface, analytics site, API, and developer SDK are being redesigned to work with Uniswap v3.

- The initial Uniswap v3 router and position manager contracts are almost complete. While still subject to change, they are available [here](https://github.com/Uniswap/uniswap-v3-periphery).

- Documentation, guides, and further examples are in progress.

- Additional infrastructure to support fungibile positions, liquidity mining, more complex strategies, and various other use cases will be built by Uniswap Labs together with the Uniswap community **after mainnet launch**

## Reach out

On Friday, March 26 at 2pm ET we will host an AMA on the official Uniswap Discord, where we hope to answer any outstanding questions you may have around Uniswap v3. Questions can be submitted ahead of time [here](https://docs.google.com/forms/d/e/1FAIpQLSebgW4Ta1Iq4gaPKvcDExliyGjrfUpvWeJKRAPD1KK7s-cNNw/viewform?usp=sf_link).

We will be releasing further updates, additional information, and initial documentation over the coming days and welcome all feedback and involvement from our community.

If you are integrating and wish to get in touch, please fill out this [form](https://docs.google.com/forms/d/e/1FAIpQLSfH6fFaaCoPlDW570ZYN-9VOS_-Fu9gl8rRFoANtx0XWQtNaQ/viewform?usp=sf_link) and we will try to respond as soon as possible. Alternatively, reach out in the #v3-integrations channel in the community Discord

To get involved and stay up to date:

- Join the Uniswap community [discord](https://discord.gg/FCfyBSbCU5)
- Follow Uniswap on [Twitter](https://twitter.com/Uniswap)
- Subscribe to the Uniswap [blog](/blog)
- Register as a delegate [Sybil](http://sybil.org/)
- Participate in [Uniswap governance](http://gov.uniswap.org/)

Uniswap Team
🦄

Introducing Uniswap v3

Today we're excited to introduce **[Sybil](https://sybil.org/), a governance tool for discovering delegates.** Sybil **maps on-chain addresses to digital identities** to maintain a list of delegates, all while avoiding pesky user signups, on-chain transactions, and manual record keeping.

We hope that Sybil can grow adoption of Uniswap's governance system and encourage both existing and future Uniswap delegates to verify their identities, **making it easier for delegators to discover and engage with their community representatives**.

## The importance of delegation

Experimentation with on-chain governance systems continues to gain popularity, and for good reason! Community ownership reduces single points of failure and as protocols begin to develop into products that resemble legacy services — albeit in a structurally decentralized fashion — they naturally require good management.

The ability for token holders to delegate their votes, or to stand as a delegate themselves, is key to the success of on-chain governance systems, allowing for high quality community members to build meaningful influence and otherwise-marginalized token holders to engage in a representative fashion. We believe that **the most successful protocols will be the ones that are able to attract the best talent and the most engaged communities.**

Yet as an emerging primitive, delegation-based governance systems are still gaining some important infrastructure. Sybil's purpose is to provide a simple way for governance token holders to identify their community representatives, and in doing so grow engagement in the protocol's development process.

## How it works

![sybil](//images.ctfassets.net/oc3ca6rftwdu/NGuCmwtY8b1g4lJPXvQC0/4faf849c664b1004510f69c6045461d8/sybil.gif)

The Sybil verification flow is a three step process.

1. Users sign into Twitter and connect a Web3 wallet
2. Users sign a message that includes their Twitter handle using their private key
3. Users then tweet this message from their Twitter account

In the background, Sybil verifies that the tweet content matches the signed message. Once a user has been verified, their Twitter handle is matched to their Ethereum address and will appear on the Sybil interface next to their associated vote count. Sybil users can proceed to **review available delegates, as well as delegate or vote on governance proposals directly through the interface.**

## Extending Sybil

At launch, Sybil supports both Uniswap and Compound's delegate lists but it's mapping tool can be used to display public identities for any project.

Identities work cross-platform, so users will only ever need to go through Sybil verification once per identity. For now, Sybil is solely integrated with Twitter, although the architecture allows for any other service to act as an authentication method: GitHub integration is coming soon!

Sybil's use cases extend beyond delegation. The mapping of addresses to social identities can be leveraged for features like trading and gaming leaderboards, as well as Ethereum-based messaging.

Similarly, the Sybil verification process is not constrained to the Sybil.org interface. The documentation below provides detailed steps for both supporting the Sybil verification process directly from your existing interface and running custom verification flows around list creation.

## Get involed

- [Verify yourself as a delegate on Sybil.org](https://sybil.org/)

- [Use the Sybil list](https://github.com/Uniswap/sybil-list#use-the-sybil-list)

- [Verify your own list](https://github.com/Uniswap/sybil-list#verify-your-own-list)

- [Contribute to the Sybil interface](https://github.com/Uniswap/sybil-interface)

Sybil maps on-chain addresses to digital identities to maintain a list of delegates, all while avoiding pesky user signups, on-chain transactions, and manual record keeping.

Introducing Sybil

# TL;DR
- UNI, the Uniswap Protocol token, is live!

- UNI contract address: [0x1f9840a85d5aF5bf1D1762F925BDADdC4201F984](https://etherscan.io/token/0x1f9840a85d5aF5bf1D1762F925BDADdC4201F984)

- 60% of the UNI genesis supply is allocated to Uniswap community members, a quarter of which (15% of total supply) has already been distributed to past users

- To start, UNI is available through four liquidity mining pools: UNI holders may vote to add more pools after an initial 30-day governance grace period

# Community-led Growth

Since its inception, the Uniswap Protocol (Uniswap) has served as trustless and highly decentralized financial infrastructure.

[Inspired by Ethereum's vision](https://uniswap.org/blog/uniswap-history/#ethereum-values), we have long committed to the ideals of permissionless access, security, and immutability, all indespensable components for a future where anyone in the world can access financial services without fear of discrimination or counterparty risk.

Now rivaling centralized incumbents on daily volume, Uniswap's success to date — achieved without involvement of the core development team since deployment — indicates that there is considerable demand for permissionless financial services.

In less than two years, the protocol has:

- Supported over **$20bn** volume ($270k of which was socks!) traded by over **250,000** unique addresses across **8,484** unique assets

- Secured over **$1bn** liquidity deposited by over **49,000** unique liquidity providers (LPs), earning **$56m** fees in the process

- Emerged as foundational DeFi infrastructure, with integrations across **hundreds** of interfaces and applications

Having proven product-market fit for highly decentralized financial infrastructure with a platform that has thrived independently, **Uniswap is now particularly well positioned for community-led growth, development, and self-sustainability**. The introduction of UNI (ERC-20) serves this purpose, enabling shared community ownership and a vibrant, diverse, and dedicated governance system, which will actively guide the protocol towards the future.

Uniswap has always embraced the tenets of **neutrality and trust minimization**: it is crucial that governance is constrained to where it is strictly necessary. With this in mind, the Uniswap governance framework is limited to contributing to both protocol development and usage as well as development of the broader Uniswap ecosystem.

In doing so, **UNI officially enshrines Uniswap as publicly-owned and self-sustainable infrastructure while continuing to carefully protect its indestructible and autonomous qualities**.

**UNI Allocation**

1 billion UNI have been minted at genesis and will become accessible over the course of 4 years. The initial four year allocation is as follows:

- 60.00% to Uniswap community members `600,000,000 UNI`

- 21.266% to team members and future employees with 4-year vesting `212,660,000 UNI`

- 18.044% to investors with 4-year vesting `180,440,000 UNI`

- 0.69% to advisors with 4-year vesting `6,900,000 UNI`

A **perpetual inflation rate of 2% per year will start after 4 years**, ensuring continued participation and contribution to Uniswap at the expense of passive UNI holders.

![Genesis](//images.ctfassets.net/oc3ca6rftwdu/4LENtaJrIj1UAGXvk3dWLN/d71840cd0a8d9f5dee40c1551a09a866/Genesis.png)

![Inflation](//images.ctfassets.net/oc3ca6rftwdu/3YFBEhXuSEvAHbRioJjjHb/4c1ab062bd07c410d0a541881ecf011d/Inflation.png)
# A Retrospective

Uniswap owes its success to the thousands of community members that have joined its journey over the past two years. These early community members will naturally serve as responsible stewards of Uniswap.

15% of UNI _`150,000,000 UNI`_ can immediately be claimed by **historical liquidity providers, users, and SOCKS redeemers/holders** based on a snapshot ending September 1, 2020, at 12:00 am UTC.

_4.91664% pro-rata to all **49,192** historical LPs `49,166,400 UNI`_

**~49 million UNI** are claimable by historical liquidity providers. The formula accounts for LP liquidity on a per-second basis since the deployment of Uniswap v1, ensuring that rewards are weighted towards LPs that provided liquidity when total liquidity was low.

_10.06136% split evenly across all **251,534** historical user addresses `100,613,600 UNI`_

400 UNI are claimable by each address that has ever called the Uniswap v1 or v2 contracts. This includes **~12,000** addresses that have only ever submitted failed transactions — love you guys.

_0.022% to **220** SOCKS holders/redeemers `220,000 UNI`_

1000 UNI are claimable by each address that has either redeemed SOCKS tokens for physical socks or owned at least one SOCKS token at the snapshot date.

[View the formula source code here](https://github.com/Uniswap/retroactive-query)

# Community Treasury

![Release Schedule](//images.ctfassets.net/oc3ca6rftwdu/5cJu23PJP2zl6DlPOFFWwE/a768008b141183481dddc9bd38266df8/Release_Schedule.png)

With 15% of tokens already available to be claimed by historical users and liquidity providers, the governance treasury will retain 43% [430,000,000 UNI] of UNI supply to distribute on an ongoing basis through **contributor grants, community initiatives, liquidity mining**, and other programs.

UNI will vest to the governance treasury on a continuous basis according to the following schedule. Governance will have access to vested UNI starting October 18 2020 12:00am UTC.

| **Year** | **Community Treasury** | **Distribution %** |
| -------- | ---------------------- | ------------------ |
| Year 1   | 172,000,000 UNI        | 40%                |
| Year 2   | 129,000,000 UNI        | 30%                |
| Year 3   | 86,000,000 UNI         | 20%                |
| Year 4   | 43,000,000 UNI         | 10%                |

Team, investor, and advisor UNI allocations will have tokens locked up on an identical schedule.

# Liquidity Mining

An initial liquidity mining program will go live September 18 2020 12:00am UTC. The initial program will run until November 17 2020 12:00am UTC and target the following four pools on Uniswap v2:

- ETH/USDT

- ETH/USDC

- ETH/DAI

- ETH/WBTC

5,000,000 UNI will be allocated per pool to LPs proportional to liquidity, which roughly translates to:

- 83,333 UNI per pool per day

- 13.5 UNI per pool per block (14s blocktime)

These UNI are not subject to vesting or lock up.

After 30 days, governance will reach its vesting cliff and Uniswap governance will control all UNI vested to the Uniswap treasury. At this point, governance can vote to allocate UNI towards grants, strategic partnerships, governance initiatives, additional liquidity mining pools, and other programs.

# Governance assets

A community-managed treasury opens up a world of infinite possibilities. We hope to see a variety of experimentation, including ecosystem grants and public goods funding, both of which can foster additional Uniswap ecosystem growth. Uniswap has set the standard for automated liquidity provision: it is now time to set the benchmark for responsible but radical, long-term aligned on-chain governance systems.

Uniswap governance will be live from day one, although control over the treasury will be delayed until October 17 2020 12:00am UTC. Control over the Uniswap fee switch is subject to a 180 day time lockdelay.

These grace periods provide the Uniswap community enough time to familiarize itself with the governance system, bring in **a diverse and high-quality set of protocol delegates,** and begin discussions and communications around potential governance proposals.

UNI holders are responsible for ensuring that governance decisions are made in compliance with applicable laws and regulations. To help facilitate this, the fee switch has been initialized to a contract UNI holders can use to vote on tokens for which they will collect fees. The community is encouraged to consult knowledgeable legal and regulatory professionals before implementing any specific proposal.

The Uniswap team will continue to have no involvement in v2 protocol development, auditing, and other matters. Similarly, team members will not participate directly in governance for the foreseeable future, although they may delegate votes to protocol delegates without seeking to influence their voting decisions.

In the meantime, UNI holders will have immediate ownership of:

- Uniswap governance

- UNI community treasury

- The protocol fee switch

- uniswap.eth ENS name

- Uniswap Default List (tokens.uniswap.eth)

- [SOCKS](https://twitter.com/Uniswap/status/1126506339075641344?s=20) liquidity tokens

Initial governance parameters are as follows:

- 1% of UNI total supply (delegated) to submit a governance proposal

- 4% of UNI supply required to vote &#39;yes&#39; to reach quorum

- 7 day voting period

- 2 day timelock delay on execution

# Next steps

All historical users, liquidity providers, and SOCKS redeemers can [claim their UNI now](https://app.uniswap.org/).

![claim](//images.ctfassets.net/oc3ca6rftwdu/70NvjSZ2wkfxYdADfY0cIJ/1663651b217fba02098d2d89fa8b01ac/claim.gif)

Liquidity providers in the preliminary set of targeted pools can deposit their liquidity tokens. Mining will begin on September 18th 2020 12am UTC.

![deposit](//images.ctfassets.net/oc3ca6rftwdu/6rx1SH2oUin18PF1isMs8b/7ce49cda632df911b39d226e4570433c/deposit.gif)

UNI tokens can be delegated and used to vote through the [governance portal](https://app.uniswap.org/#/vote).

![vote](//images.ctfassets.net/oc3ca6rftwdu/4Fb68jWnP4AmXlefD5Ir9d/3a288e294b2d604a68b31ec2c427144a/vote.gif)

Set up an account on [gov.uniswap.org](https://gov.uniswap.org) to start shaping and participating in protocol governance

# Contracts

#### UNI Token

- [0x1f9840a85d5af5bf1d1762f925bdaddc4201f984](https://etherscan.io/token/0x1f9840a85d5af5bf1d1762f925bdaddc4201f984)

- [UNI Token Icon](https://logo.uniswap.org)

#### Liquidity mining

- [USDT Mining Pool](https://etherscan.io/address/0x6c3e4cb2e96b01f4b866965a91ed4437839a121a)

- [USDC Mining Pool](https://etherscan.io/address/0x7FBa4B8Dc5E7616e59622806932DBea72537A56b)

- [DAI Mining Pool](https://etherscan.io/address/0xa1484C3aa22a66C62b77E0AE78E15258bd0cB711)

- [WBTC Mining Pool](https://etherscan.io/address/0xCA35e32e7926b96A9988f61d510E038108d8068e)

#### Governance

- [0x5e4be8Bc9637f0EAA1A755019e06A68ce081D58F](https://etherscan.io/address/0x5e4be8Bc9637f0EAA1A755019e06A68ce081D58F)

#### Timelock

- [0x1a9c8182c09f50c8318d769245bea52c32be35bc](https://etherscan.io/address/0x1a9c8182c09f50c8318d769245bea52c32be35bc)

UNI, the Uniswap Protocol token, is live!

Introducing UNI

Uniswap v2, the second iteration of the Uniswap protocol, has been [deployed to the Ethereum mainnet](https://etherscan.io/address/0x5C69bEe701ef814a2B6a3EDD4B1652CB9cc5aA6f#code)!

An [audit report and formal verification](https://rskswap.com/audit.html) has already been released and the [Uniswap v2 Bug Bounty](https://twitter.com/Uniswap/status/1250474233131495424) has been running for over a month.

Developers can begin building on Uniswap v2 immediately! Initial [docs](http://uniswap.org/docs/v2) and [example projects](http://github.com/Uniswap/uniswap-v2-periphery/tree/master/contracts/examples) are already available.

Today, the following open source projects are also being released:

- A [migration portal](https://migrate.app.uniswap.org/) for moving liquidity from Uniswap v1 to Uniswap v2
- An updated [interface](https://app.uniswap.org/) for swapping and liquidity provision on Uniswap v2
- An updated [info site](https://uniswap.info/) for Uniswap v2 analytics

Uniswap v2 has many new features and technical improvements compared with Uniswap v1 including:

- ERC20 / ERC20 Pairs
- Price Oracles
- Flash Swaps
- And much more!

For full details on the benefits of Uniswap v2 for liquidity providers and traders, please read the Uniswap v2 [announcement blog post](https://uniswap.org/blog/uniswap-v2). For more information on the launch please read below.

## Liquidity Migration

The [migration portal](https://migrate.app.uniswap.org/) makes the process of withdrawing liquidity from Uniswap v1 and depositing it into Uniswap v2 fast and simple.

This portal is only for Uniswap v1 liquidity providers. If you are not a Uniswap v1 liquidity provider but wish to use Uniswap v2, you can do so from the [updated interface](https://app.uniswap.org/).

![migrate](//images.ctfassets.net/oc3ca6rftwdu/5xzuQih4uAr7gLe582CB9h/d43c2d1a8733fd63d4f79665d5bf0b07/migrate.png)

## Updated Interface

The open source [interface](https://app.uniswap.org/) has been updated to work with Uniswap v2!

It now supports creating and providing liquidity in ERC20 / ERC20 pairs, such as DAI/USDC.

Swapping logic has been updated to properly route between ERC20 / ERC20 pairs.

While Uniswap V2 uses WETH, this is abstracted in the interface and ETH can be used directly.

#### Swapping

![swap](//images.ctfassets.net/oc3ca6rftwdu/1gd1NObSep7eSvPIOU7yQA/6ad25f2997d4ab46d41f4534b38e00da/swap.png)

#### Liquidity Provision

![pool](//images.ctfassets.net/oc3ca6rftwdu/GCx23qpRDdI4DO67xCsUW/4ad473319ef230be3630e46f188057c4/pool.png)

#### Pool Creation

![create](//images.ctfassets.net/oc3ca6rftwdu/1wAyZ45R3nj9xuLYduFnBo/368b801dcee8b44b8e9df8eafeb0bedd/create.png)

## Info Site

Uniswap V2 analytics are available at [uniswap.info](http://uniswap.info/), built on top of the open source [Uniswap V2 subgraph](https://github.com/Uniswap/uniswap-v2-subgraph).

![info](//images.ctfassets.net/oc3ca6rftwdu/5oNOv3txoaYNAyDICBAY7N/bfe66b5df80d7fb24042748f9cbdc31d/info.jpeg)

## What will happen to Uniswap v1

Uniswap v1 is an automated, decentralized set of smart contracts. It will continue functioning for as long as Ethereum exists.

## All other questions

For all questions, you can join and engage with the community in the [Uniswap Discord](https://discord.gg/FCfyBSbCU5).

Uniswap v2, the second iteration of the Uniswap protocol, has been deployed to the Ethereum mainnet!

Uniswap v2 Mainnet Launch

**Uniswap V1** was the proof-of-concept for a new type of decentralized marketplace.

As a venue for pooled, automated liquidity provision on Ethereum, the Uniswap protocol (Uniswap) functions without upkeep, providing an unstoppable platform for ERC20 token conversion. **Uniswap V1 will continue to work for as long as Ethereum exists**, and so far, it has worked very nicely for a wide variety of use cases.

![v1_liquidity](//images.ctfassets.net/oc3ca6rftwdu/70IjsxNh44rMBHAL4VH6w9/05ff60201c4bada451da7f9de878ed42/v1_liquidity.png)

However, pooled automated liquidity remains nascent technology, and **we have only just begun to realize its potential**. For this reason, last year [we raised a seed round](https://finance.yahoo.com/news/paradigm-backs-decentralized-exchange-protocol-184824051.html) and formed a dedicated team to research and develop Uniswap alongside the broader Ethereum community.

**Uniswap V2** is our second iteration of Uniswap and includes many new features and improvements. This article will serve as a high-level overview of these changes including:

- [ERC20 / ERC20 Pairs](#erc20--erc20-pairs)
- [Price Oracles](#price-oracles)
- [Flash Swaps](#flash-swaps)
- [Core/Helper Architecture](#corehelper-architecture)
- [Technical Improvements](#technical-improvements)
- [Path to Sustainability](#path-to-sustainability)
- [Testnet and Launch Details](#testnet-and-launch-details)

For full details check out the:

- [Core smart contracts](https://github.com/Uniswap/uniswap-v2-core/)
- [Periphery smart contracts](https://github.com/Uniswap/uniswap-v2-periphery)
- [Uniswap V2 Technical Whitepaper](https://uniswap.org/whitepaper.pdf)
- [Uniswap V2 Documentation](https://docs.uniswap.org/contracts/v2/overview)

## ERC20 / ERC20 Pairs

In Uniswap V2, **any ERC20 token can be pooled directly with any other ERC20 token**. Wrapped Ether (WETH) is used instead of native ETH in the core contracts, although end users can still use ETH through helper contracts.

In Uniswap V1, all liquidity pools are between ETH and a single ERC20 token. Having a constant numeraire provides a nice UX advantage — users can swap any ERC20 for any other ERC20 by routing through ETH. Since ETH is the most liquid Ethereum-based asset, and does not introduce any new platform risk, it was the best choice for Uniswap V1.

![v1_DAI_USDC_swap.png](//images.ctfassets.net/oc3ca6rftwdu/3AzTnzy9HHYLRuFFWO4iOF/13c3e46ddcdcee0733c3a9f02f89f35a/v1_DAI_USDC_swap.png)

However, the introduction of ERC20 token/ERC20 token pools in Uniswap V2 can be **useful for liquidity providers, who can maintain more diverse ERC20 token denominated positions**, without mandatory exposure to ETH. One example would be a DAI/USDC pair, which should theoretically have little volatility for liquidity providers, but is useful for trading.

Having direct ERC20/ERC20 pairs can also improve prices because routing through ETH for a swap between two other assets (say, DAI/USDC) involves paying fees and slippage on two separate pairs instead of one.

If two ERC20 tokens are not paired directly, and do not have a common pair between them, they can still be swapped as long as a path between them exists. Router contracts can be used to optimize between direct and multi-step swaps.

![v2_swaps.png](//images.ctfassets.net/oc3ca6rftwdu/7z1SzJMgHEBaK8zrbxvfFW/617ebcb450b46a30bbced0730f3db7bb/v2_swaps.png)

We still anticipate ETH pairs being very popular, but expect to see growth in other types of pairs over time.

## Price Oracles

**Uniswap V2 implements new functionality that enables highly decentralized and manipulation-resistant on-chain price feeds.** This is achieved by measuring prices when they are expensive to manipulate, and cleverly accumulating historical data. This allows external smart contracts to create gas-efficient, time-weighted averages of Uniswap prices across **any** time interval.

**On-chain price feeds are a critical component for many decentralized financial applications** including those similar to derivatives, lending, margin trading, prediction markets and more. Despite [closely tracking the real-world price](https://arxiv.org/abs/1911.03380) most of the time, Uniswap V1 cannot be used safely as a price oracle because the price can move significantly in a short period of time.

Uniswap V2 includes a number of improvements for price feeds built on top of it. First, every pair measures (but does not store) the market price at the beginning of each block, before any trades take place. This price is expensive to manipulate because it was set by the last transaction in a previous block.

**To set the measured price to one that is out of sync with the global market price, an attacker has to make a bad trade at the end of a previous block** , typically with no guarantee that they will be able to arbitrage it back in the next block. Attackers will lose money to arbitrageurs, unless they can "selfishly" mine two blocks in a row. This type of attack presents a number of challenges and [has not been observed to date](https://arxiv.org/abs/1912.01798).

This alone is not enough. If significant value settles based on the price resulting from this mechanism, then the profit of an attack likely can outweigh the loss.

Instead, Uniswap V2 adds this end-of-block price to a single cumulative-price variable in the core contract weighted by the amount of time this price existed. **This variable represents a sum of the Uniswap price for every second in the entire history of the contract.**

![v2_onchain_price_data.png](//images.ctfassets.net/oc3ca6rftwdu/42XrxVZK2oQ8rYM2FsMcu7/98dfeb316dc86fe0d9397319b0d6fa92/v2_onchain_price_data.png)

This variable can be used by external contracts to track accurate time-weighted average prices (TWAPs) across any time interval.

This is done by reading the cumulative price from an ERC20 token pair at the beginning and at the end of the interval. The difference in this cumulative price can then be divided by the length of the interval to create a TWAP for that period.

![v2_twap.png](//images.ctfassets.net/oc3ca6rftwdu/1AogZXNEKw1mI5lsbDg652/c99f14f50b09dc33dbc20f4a45d4102c/v2_twap.png)

TWAPs can be used directly or as the basis for moving averages (EMAs and SMAs) as needed.

A few notes:

- For a 10-minute TWAP, sample once every 10 minutes. For a 1-week TWAP, sample once every week.
- For a simple TWAP, the cost of manipulation increases (approx. linear) with liquidity on Uniswap, as well as (approx. linear) with the length of time over which you average.
- Cost of an attack is relatively simple to estimate. Moving the price 5% on a 1-hour TWAP is approximately equal to the amount lost to arbitrage and fees for moving the price 5% every block for 1 hour.

There are some nuances that are good to be aware of when using Uniswap V2 as an oracle, especially where manipulation resistance is concerned. The [whitepaper](https://uniswap.org/whitepaper.pdf) elaborates on some of them. Additional oracle-focused developer guides and documentation will be released soon.

In the meantime, check out our [example implementation](https://github.com/Uniswap/uniswap-v2-periphery/blob/master/contracts/examples/ExampleOracleSimple.sol) of a 24 hr TWAP Oracle built on Uniswap V2!

## Flash Swaps

**Uniswap V2 flash swaps** allow you to withdraw as much as you want of any ERC20 token on Uniswap at no upfront cost and do anything you want with them (execute arbitrary code), provided that by the end of the transaction execution, you either:

- Pay for all ERC20 tokens withdrawn
- Pay for a percentage of ERC20 tokens and return the rest
- Return all ERC20 tokens withdrawn

Liquidity provider fees are enforced by subtracting 0.3% from all input amounts, even if the input ERC20 tokens are being returned as part of a flash swap.

![v2_flash_swaps.png](//images.ctfassets.net/oc3ca6rftwdu/TVouj2o7xm2Xe6TbahdkE/54fcf120ce732de9d246471fc0f84735/v2_flash_swaps.png)

It is often the case that a series of transactions on Ethereum has a high upfront cost but ultimately a low net cost or is even net profitable by the end of the series. **Flash swaps** are incredibly useful because they **remove upfront capital requirements and unnecessary constraints on order-of-operations** for multi-step transactions that use Uniswap.

One example is **arbitrage with no upfront capital**. Imagine a scenario where you can sell 200 DAI for 1 ETH on Uniswap and then sell that 1 ETH on Oasis for 220 DAI at a 20 DAI profit. But, unfortunately, you don't have any DAI in your wallet.

![no_capital.gif](//images.ctfassets.net/oc3ca6rftwdu/4O9Q6zLSjE4LbMeVcciagr/e449a8aa9ecfb71ef454f43b3c603850/no_capital.gif)

With flash swaps you could synchronously withdraw 1 ETH from Uniswap, sell it on Oasis for 220 DAI and then pay for the ETH on Uniswap with 200 of the DAI you just purchased.

Another example use case is **improving the efficiency of margin trading protocols** that borrow from lending protocols and use Uniswap for ERC20 token conversion. This is currently done with the following process:

1. Add user ETH to Maker,
2. Borrow DAI from Maker
3. Swap DAI for ETH on Uniswap
4. Repeat steps 1–3 **multiple times** until you reached desired leverage

With flash swaps this process is simplified to:

1. Withdraw all ETH you want from Uniswap
2. Add user and Uniswap ETH to Maker
3. Borrow all DAI you need from Maker
4. Return DAI to the Uniswap protocol

If the Uniswap pool does not receive enough DAI to cover the ETH withdrawn, then the entire transaction will revert; thus, all ERC20 tokens are returned or paid for at the end of the transaction.

## Core/Helper Architecture

[Uniswap V2 Core](https://github.com/Uniswap/uniswap-v2-core) are the essential Uniswap V2 smart contracts, consisting of:

- [UniswapV2Pair.sol](https://github.com/Uniswap/uniswap-v2-core/blob/master/contracts/UniswapV2Pair.sol), which implements core swapping and liquidity provision functionality
- [UniswapV2Factory.sol](https://github.com/Uniswap/uniswap-v2-core/blob/master/contracts/UniswapV2Factory.sol), which deploys [UniswapV2Pair.sol](https://github.com/Uniswap/uniswap-v2-core/blob/master/contracts/UniswapV2Pair.sol) contracts for any ERC20 token/ERC20 token pair

**Core is minimalist in design, removing all logic that is not strictly necessary to secure liquidity stored in its pools.** Logic related to trader security or ease-of-use must be implemented in external helper contracts. Since external helpers can be improved and replaced without needing to migrate liquidity, **this improves on the flexibility and modularity of Uniswap.**

[Uniswap V2 Periphery](https://github.com/Uniswap/uniswap-v2-periphery) is an initial set of helpers, including:

- [A router contract](https://github.com/Uniswap/uniswap-v2-periphery/blob/master/contracts/UniswapV2Router01.sol) that performs the safety checks needed for safely swapping, adding, and removing liquidity.
- [A migrator contract](https://github.com/Uniswap/uniswap-v2-periphery/blob/master/contracts/UniswapV2Migrator.sol) that can remove liquidity from Uniswap V1 and deposit it into Uniswap V2 in a single transaction.
- [A library contract](https://github.com/Uniswap/uniswap-v2-periphery/blob/master/contracts/libraries/UniswapV2Library.sol) that can be used in the creation of other helper contracts.
- [An example oracle contract](https://github.com/Uniswap/uniswap-v2-periphery/blob/master/contracts/examples/ExampleOracleSimple.sol) that creates a simple TWAP from Uniswap V2 cumulative prices.
- [An example flash swap contract](https://github.com/Uniswap/uniswap-v2-periphery/blob/master/contracts/examples/ExampleFlashSwap.sol) that withdraws ERC20 tokens, executes arbitrary code, and then pays for them.

_Periphery contracts described as "Example" are for illustrative purposes only and should not be used in actual transactions._

While this is a huge improvement, there are some new smart contract patterns introduced which developers building on top of Uniswap should be aware of.

- Core uses WETH instead of ETH. Routers can convert between ETH and WETH allowing users to use ETH directly
- Core stores ERC20 token balances internally instead of relying on the balances stored in the ERC20 token contract
- Core no longer calls `transferFrom` on `msg.sender`. Instead ERC20 tokens should be sent to core directly by a router before calling the `swap`, `mint` or `burn` functions.
- Core will determine the number of ERC20 tokens sent to it based on the difference between its current and stored balances.
- Core no longer returns the maximum number of ERC20 tokens for a given input amount. Instead, a router must specify the number of ERC20 tokens it wants. Core will send this number as long as the invariant is preserved after taking 0.3% off any input amount.
- Routers should handle logic around slippage safety checks and multihop trades.

## Technical Improvements

Uniswap V2 contains many other significant changes and improvements including the following:

- Smart contracts are written in Solidity instead of Vyper
- Use CREATE2 to make the pool address deterministic based on the ERC20 token pair
- Uniswap V2 properly handles ["missing return" ERC20 tokens](https://medium.com/coinmonks/missing-return-value-bug-at-least-130-tokens-affected-d67bf08521ca) that do not work on Uniswap V1, such as USDT and OMG
- Built in metaTransaction `approve` function for liquidity tokens
- Increase re-entrancy protection using mutex (adds support for ERC777 and other non-standard ERC20 tokens)
- Fix bug from Uniswap V1 that uses all remaining gas on failing transactions
- More descriptive error messages. The above bug caused failing transactions to only return the error "Bad Jump Destination"

## Path to Sustainability

Decentralization is in many ways about increasing participation and removing central points of failure. Uniswap V1 is already highly decentralized, trustless, and censorship resistant. But for it to achieve its full potential as infrastructure in a fair and open financial system — **it must continue to grow and improve**.

To open a path to self-sustainability, the code for Uniswap V2 includes a small protocol charge mechanism. At launch, the protocol charge will default to 0, and the liquidity provider fee will be 0.30%. If the protocol charge is switched on, it will become 0.05% and the liquidity provider fee will be 0.25%.

This feature, including the exact percentage amounts, is hardcoded into the core contracts which remain decentralized and non-upgradable. It can be turned on, and directed by, a [decentralized governance process](https://twitter.com/jessewldn/status/1135741055045967874) deployed after the Uniswap V2 launch. There is no expectation that it will be turned on in the near future but it opens the possibility for future exploration.

In the Classical Period of crypto (2014), [Vitalik described](https://blog.ethereum.org/2014/05/06/daos-dacs-das-and-more-an-incomplete-terminology-guide/) decentralized autonomous organizations (DAOs) as "automation at the center, humans at the edges."

> An entity that lives on the internet and exists autonomously, but also heavily relies on hiring individuals to perform certain tasks that the automaton itself cannot do

This perfectly describes the Uniswap protocol's path forward. In Uniswap V1 pricing, coordination, listing, and trade execution are fully automated while arbitrage and liquidity provision are incentivized.

However, **the best version of Uniswap will be one that autonomously incentivizes contributions to its own growth and development** as well as to the broader ecosystem in which it exists--one that supports the contributions of the **incredible community** that has formed and continues to grow.

Uniswap is an ideal candidate for exploring decentralized on-chain cash flows. **Without any additional growth**, it will generate more than $5M in liquidity provider fees this year. If the protocol charge was on, ~$830,000 of this would instead go to a decentralized funding mechanism used to support contributions to Uniswap and its ecosystem.

**This type of support boosts network effects from which Uniswap and its users benefit greatly.** Incentivized contributions lead to increased protocol functionality and usage. Usage generates fees which attracts liquidity. Increased liquidity further entrenches Uniswap, attracting additional users, contributors, and integrations.

![graph.jpeg](//images.ctfassets.net/oc3ca6rftwdu/25HxFy6tAcgXe2xyay8WRS/3560a3237ea04816f1bf6d69787b52b7/graph.jpeg)

For more details, please refer to the technical [whitepaper](https://uniswap.org/whitepaper.pdf) or [code](https://github.com/Uniswap/v2-core).

## Testnet and Launch Details

While the core smart contracts are finished, additional work is still in progress.

- Uniswap V2 smart contracts are undergoing formal verification and security auditing. Bug bounties will be used to encourage additional community security review.
- The interface, analytics site, API, and developer SDK are being updated to work with Uniswap V2.
- Documentation, guides, and examples are still being worked on.
- When everything else is ready, a simple migration UX will be released to improve the experience of moving from Uniswap V1 to Uniswap V2

Pending a successful formal verification, we are optimistic that Uniswap V2 can be deployed in Q2 of this year. However, please keep in mind that this is a target and not an announced release date.

In the meantime, developers can begin playing with Uniswap V2 today! The factory and an initial router smart contract have already been deployed to the Ropsten, Rinkeby, Kovan, and Görli testnets.

**We want to hear from you!**

We will be releasing additional updates, information, and documentation over the coming months. We look forward to continued feedback and involvement from the fantastic Uniswap community. To get involved and stay up to date:

- [Join the Uniswap community discord](https://discord.gg/FCfyBSbCU5)
- [Follow Uniswap on Twitter](https://twitter.com/Uniswap)

All about Uniswap V2. Price oracles, optimistic swaps and much much more. Launching April 2020.