What are the features of the newly launched V3 version of PancakeSwap?

Author: Ignas, DeFi Researcher

Compiled by: Leo, BlockBeats

PancakeSwap has just launched its new V3 version, which is a fork of Uniswap V3. The difference is that this new version focuses on enhancing user experience and usability. DeFi researcher Ignas wrote an article about the "New Features of PancakeSwap V3," which is compiled as follows:

First, let's review the history of Uni: Uniswap V2 was launched during the summer of DeFi in 2020, adding color to an already booming DeFi market. Soon after, many forks emerged, making Uni V2 the most forked DeFi protocol in history, with PancakeSwap being one of them.

In an era when Uniswap was unwilling to deploy on any chain other than Ethereum, forks became meaningful. Due to this "unwillingness" and the high Gas fees on ETH, a Uni V2 fork appeared on every layer, leading PancakeSwap to launch its forked version of Uni and quickly dominate the BSC chain, currently boasting a TVL of $3.4 billion.

Then came Uniswap V3, launched two years ago. However, Uniswap previously had a license prohibiting forks, which was effective until April 1, 2023. Uniswap brought several improvements to its V3, including:

• Concentrated liquidity leading to up to 4000 times capital efficiency;

• Multiple fee tiers;

Many DEXs were unable to fork Uniswap V3 before the expiration of the Uni license, so they had to innovate to gain a competitive edge, such as:

• Trader Joe's liquidity book;

• KyberSwap's Elastic;

• Velodrome's ve (3,3) tokenomics;

• Dodo's proactive market making.

Similarly, PancakeSwap has added unique features:

• Easy-to-use binary options

• On-chain gambling

• Perps in collaboration with ApolloX

• New mining opportunities

• It has also improved the tokenomics of CAKE and adopted multi-chain technology.

I find the most interesting upgrade in PCS to be the market maker (MM) integration, which can provide lower fees and more suitable prices with low TVL, without the need to spend CAKE incentives. However, achieving high TVL on Ethereum is not easy. Here are more details about the MM integration:

In short: PancakeSwap has always focused on retail investors.

So, I was surprised that PCS V3 is a branch of Uniswap because V3 is difficult for beginners to use. For example, concentrated liquidity benefits efficiency, but LPs need to actively manage their positions.

Fortunately, PCS will soon launch an automatic position manager, which will enable one-click liquidity deposits and keep liquidity within a certain range to easily earn fees and mining rewards.

PCS has also improved two other drawbacks of Uniswap V3:

• Automatic APR display, which provides real-time APR data for V3 LPs based on liquidity, historical trading volume, and position configuration, eliminating the need for third-party tools;

• Improved ROI calculator, allowing V3 LPs to estimate yield and impermanent loss, making it easy to adjust positions without complex, time-consuming calculations;

Two other practical upgrades are:

• Advanced built-in limit orders (coming soon), integrating V3, V2, StableSwap, or market makers for liquidity;

• Support for various trading fee tiers, specifically 0.01%, 0.05%, 0.25%, and 1%, already supporting BSC and Ethereum;

In summary, PancakeSwap V3 deepens the features that PCS has always been proud of, improving the user experience and incentives for retail investors while benefiting from Uni V3's capital efficiency.

Finally, will PancakeSwap V3 add color to DeFi like Uniswap?