Unbound Finance launches aggregator contracts for the much anticipated Uniswap V3 on Ethereum’s Kovan Testnet. This allows users to add liquidity to the AMM pools and mint Liquidity Pool Tokens in the form of NFTs. These NFT represent the receipt of your liquidity in the pools.
Uniswap, the largest decentralized exchange, has taken a path of capital efficiency for its next upgrade by bringing new passive income aspects of liquidity provisions. In version 3, the DEX introduces two core concepts – Concentrated Liquidity and Multiple Fee Tiers. The goal is to give Liquidity Providers (LPs) more control over the price range allocation while ensuring they receive a good amount of compensation for taking adverse risks. Contrary to the second version, Uniswap V3 is a more flexible and efficient Automated Market Maker (AMM) as liquidity providers will have the possibility of earning a higher return on their capital. With the aggregator contracts, Unbound is bringing Uniswap V3 users an opportunity to mint LP tokens in the form of NFTs and use them as proof of receipt.
While adding liquidity on Uniswap V2 was possible through its platform, Uniswap V3 does not have such functionality. Instead, developers need to create their own version of the Uniswap aggregator to add liquidity.
Overview of Unbound Finance
Unbound Finance is the first derivative layer on Uniswap that allows users to benefit from all the offerings on V3, without paying any interest on their earnings. The platform has created an aggregator contract on Uniswap to enable users to add liquidity at specific ranges and receive NFT as their receipt for adding this liquidity. The aim is to offer individual liquidity providers a way to add liquidity to the pools while providing them with price range strategies. Some more notable benefits include:
- LPs can utilize Unbound to provide liquidity much more than their capital efficiency. Thereby, LPs can earn higher returns on their capital.
- Unbound enables ‘single-sided liquidity positions where users can add one token to a pool instead of two tokens (in V2).
- Since the platform allows LPs to select a specific price range, they get the same liquidity depth as V2 but with far less capital at risk.
- Choosing a price range on Unbound has two outcomes: a) The pool can provide more liquidity around the actual price b) LPs can earn fees only when they are providing liquidity as per their range.
- By enabling users to mint liquidity pool NFTs, Unbound intends to keep every provider’s exposure and participation different and non-interchangeable.
Wrapping it up
As the world of DeFi continues to thrive, DEXs are more popular than ever due to their decentralized nature and potential for yielding high returns on investments. With the launch of V3, Uniswap intends to bring ‘targeted’ LPs to mainstream DeFi, with price range allocations for an ‘orderly’ big swap and tiered fees for higher returns. Furthermore, Unbound is at the forefront of the revolution as it sources liquidity from Uniswap to optimize slippage for liquidity providers and assist them to fetch better returns on their capital.
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