Faster and cheaper transactions all on an Ethereum layer-2 solution
Ethereum’s most popular decentralized finance exchange, Uniswap launched its V3 exchange service on Optimism, a layer-2 solution for Ethereum. The latest upgrade comes along with faster and lower-cost transactions. However, the upgrade doesn’t feature all functionalities of the token swap service yet.
According to the developers, an alpha launch is necessary in order to give room to incorporate the layer-2 upgrade into the DEX gradually. In addition, this allows them to address any issues that may arise before the full deployment takes place. The developers emphasize that the launch should be regarded as an early alpha product.
The decentralized exchange got a major upgrade in May 2021, transitioning from version 2 to 3. Uniswap’s v3 distinguishes itself from v2 with an added functionality, providing users and developers with seamless experience while using the DEX. The latest upgrade is also an improvement on how transactions are verified on the Ethereum network.
Uniswap had its first version launched in November 2018 and has grown in leaps and bounds to become a reputable decentralized exchange. Total value locked (TVL) in Uniswap’s smart contracts currently sits at $7.98 billion.
What is Optimism?
Optimism is not a sidechain, neither is it the much-anticipated Ethereum 2.0 with a PoS consensus.Optimism is a layer-2 upgrade that allows transactions to be efficiently carried out on the Ethereum network while preserving its security. The Optimism upgrade is built inside the network and consists of a series of smart contracts that have the ability to confirm transactions on Ethereum.
What distinguishes Optimism from Ethereum is the ability to execute transactions at higher throughput, for a lower cost, and in a smarter manner. Optimism-enabled Ethereum limits the number of on-chain transactions executed on layer-1, and also introduces parties known as sequencers and verifiers. Each of them play different roles somewhat similar to the roles miners play on the proof-of-work blockchains. Essentially, Optimism takes away some of the workload from the Ethereum Layer-1 mainnet.
Started as Unipig
Optimism released a beta test for the Uniswap upgrade two years ago via a proof-of-concept called Unipig. With the alpha launch of the Uniswap DEX on Optimism-enabled Ethereum, more transactions will be confirmed within a shorter period. Optimism will eliminate the issue of pending or stuck swaps on the DEX.
Uniswap users can now transfer their assets to Optimism-enabled Ethereum from layer-1, although there are only a specific number of assets available on Optimism. Transferring tokens like SNX, USDT, ETH, DAI, Wrapped Bitcoin (WBTC) can be done via the Optimism Gateway, until other ERC20 become available.
Meanwhile, pending the full launch, Uniswap has warned that there might be downtime occasionally. During these downtime periods, users may not be able to access the layer-2 or earn fees as liquidity providers. While deposits from layer-1 to layer-2 are instant, withdrawals from the latter to the former could take as long as seven days. This gives room for users to raise disputes in the event of transaction errors. It’s all part of the testing process.