Author: TechFlow Intern

On July 17, Hayden Adams, the founder of the decentralized trading platform Uniswap, announced the launch of the non-custodial, Dutch auction-based aggregation protocol UniswapX at ETH CC.

According to an article published by Hayden Adams, UniswapX is an aggregation trading protocol that allows users to aggregate different sources of liquidity to match the best price for trades.

Currently, this feature has been launched for testing on the Uniswap frontend platform, and it can be enabled by clicking the gear icon in the upper right corner.

How to Better Aggregate Liquidity?

UniswapX aims to solve this problem by outsourcing routing complexity to an open network of third-party builders known as fillers. These third-party entities compete to fill user-initiated token swap trades using on-chain liquidity (such as decentralized trading pools across all Uniswap versions or their own private holdings).

Hayden Adams explained:

"Users initiating trades can use Uniswap directly without worrying about whether they are getting the best trade price, and trades will always be transparently recorded and settled on-chain. All orders are supported by Uniswap's smart order routing, which forces fillers to compete with Uniswap v1, v2, v3, and the upcoming v4."

Through this competitive approach, UniswapX can achieve a series of "magical operations":

• Better prices

• Gas-free transactions

• MEV protection

• No fees for failed transactions

• Gas-free cross-chain transactions (coming soon)

How to Achieve Gas-Free Transactions?

Traders sign an off-chain order, which is submitted on-chain by fillers who pay the gas fees on behalf of the traders to complete the transaction. Since traders do not need to pay gas, they do not even need to hold the native tokens of the blockchain (such as ETH, MATIC) to trade.

Additionally, the design of the protocol will also be able to mitigate maximum extractable value (MEV) attacks (such as sandwich attacks). Through UniswapX, MEV that could have been captured by arbitrage trades is returned to traders by improving prices.

Hayden Adams also emphasized that the contracts of UniswapX are immutable, and Uniswap Labs cannot modify or pause its contracts, ensuring that user funds remain self-custodied throughout the trading process.

Later this year, an official cross-chain version of UniswapX will be launched, merging trading and cross-chain operations into one.

Traders will be able to trade between different chains in seconds, including trading native assets, reducing the need for bridging tokens.

DAN, a researcher at Paradigm, stated that UniswapX will change the game for DEX, MEV, and interoperability:

1. The architecture opens up vast design space for DEX;

2. It provides a better foundation for order flow auctions, allowing MEV to be returned to users;

3. It is still early, but in the long run, the order matching component of UniswapX could even become an ideal application for decentralized block builders like Flashbots' SUAVE;

4. Seamless cross-chain, especially cross-Rollup trading, will be revolutionary;

5. UniswapX complements Uniswap V4, and improvements to the Uniswap ecosystem will not come from zero-sum redistribution.

In summary, the combination of the two points to a potential direction for the future of DEX.

Uniswap = Liquidity Protocol

UniswapX = Protocol for Finding Liquidity

When Uniswap V4 is combined with UniswapX, it will provide vast space for on-chain professional market makers, ushering in their golden age, while perhaps the most unhappy will be 1inch, which originally profited quietly; UniswapX directly opens the door for everyone to engage in "aggregated trading."

Finally, after looking at the white paper, one can't help but exclaim that the Chinese can hold up half the sky!