Uniswap v3 introduces a few features that would benefit the whole decentralized finance marketplace including InsurAce, and the DeFi insurance community.
- Concentrated Liquidity
In Uniswap v3, LP’s can concentrate their capital within custom price ranges, providing greater amounts of liquidity at desired prices.
This can help to increase the efficiency of InsurAce liquidity providers, LPs can provide more liquidity with specific price ranges and earn higher returns.
2. Range Order
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.
This can provide a new good way of exchanging InsurAce tokens while earning swap fees as a liquidity provider.
3. 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.
This can give the InsurAce LPs more choices to either earn more swap fees or avoid more risk on some non-correlated pairs and only provide LP on some low-risk pairs.
4. Advanced Oracles
Uniswap v3 oracles can provide time-weighted average prices (TWAPs) on demand for any period within the last ~9 days.
This can help InsurAce to provide more details of price changes, which will be also easier and cheaper for our community and business partners to integrate.
5. Low Gas Cost
The gas cost of v3 swaps on Ethereum mainnet is slightly cheaper than v2.
This can help to decrease the gas cost of InsurAce swaps in Uniswap.
Conclusion
Uniswap v3 is all the buzz this week. With flexible liquidity, flexible fees, and lower gas costs, it looks to address some of the issues plaguing the Ethereum network lately.
Inevitably it will mean higher adoption of DeFi protocols and therefore more TVL in DeFi, which means a larger market to be addressed for InsurAce and the wider insurance market.
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