Jul 26, 20233 min read

UniswapX Preview

The UniswapX Protocol is a decentralized trading protocol built on the Ethereum Virtual Machine, utilizing Dutch auction-based trading and signed offchain orders executed on-chain. It aggregates both onchain and offchain liquidity, incorporates MEV (Miner Extractable Value) in the form of price improvement, enables gas-free swaps, and supports cross-chain trading.

Key features of UniswapX include:

Dutch Orders: UniswapX employs a Dutch auction model, where the price of an order decays over time until it reaches a minimum acceptable price for the swapper. This incentivizes fillers to quickly find the best price for swappers while still ensuring a profit for themselves.
Signed Orders: Instead of submitting transactions, swappers sign orders specifying various parameters, including input and output tokens, amounts, decay function, claim deadline, and authorization for the UniswapX reactor contract to spend tokens on their behalf.
Cross-Chain Orders: UniswapX can be extended to support cross-chain trading, allowing swappers to trade assets between different blockchain networks. This is achieved by utilizing settlement oracles and filler bonds for secure and fast asset transfers.
Parameterization and Fees: UniswapX does not enforce specific decay functions, allowing flexibility for different implementations. Governance can set a fee of up to 0.05% on swaps, and interfaces and wallets can charge additional uncapped fees.

UniswapX is aimed at improving onchain trading and self-custody swapping. The protocol is designed to outsource routing complexity to a network of third-party fillers who compete to fill swaps using onchain liquidity, streamlining the process for swappers. It aims to provide the best prices transparently recorded and settled onchain. Swappers sign offchain orders, and fillers submit them onchain, paying the gas fees. This gas-free swapping reduces the need for native network tokens and eliminates costs for failed transactions.

MEV

UniswapX also addresses the issue of MEV by returning the value that would have been captured by arbitrage to swappers through improved prices. It further protects users from extractive MEV practices, making orders executed with fillers' inventory less vulnerable to manipulation.

Future Plans

In the future, UniswapX plans to launch a cross-chain version, allowing users to seamlessly swap between different blockchain networks. Swappers can choose the assets they receive on the destination chain, enhancing flexibility.

Launch

UniswapX is being launched as an opt-in beta on the Uniswap Labs interface. The smart contract is immutable and permissionless, and Uniswap Labs cannot modify or pause it. However, other builders can launch their own front-ends for the smart contracts.

TLDR

UniswapX aims to enhance the swapping experience through various improvements:

Enhanced prices by consolidating liquidity sources.
Gas-free swapping, reducing the need for users to pay gas fees.
Protection against MEV, ensuring users get fair prices and avoid value extraction.
No charges for failed transactions, offering a risk-free trading experience.
Additionally, UniswapX plans to extend its capabilities to support gas-free cross-chain swaps later this year.

Read more about UniswapX here: https://blog.uniswap.org/uniswapx-protocol

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