Pancake Swap, a decentralized finance (DeFi) protocol, has released version 3 of its automated market maker platform on BNB Chain, Aptos, and Ethereum.
The upgraded version boasts improved performance and lower fees. The key feature of the upgrade is enhanced capital efficiency. PancakeSwap has changed the way liquidity providers allocate capital on specific price intervals, allowing them to choose a custom price range to provide liquidity.
This gives specific control over capital investments to higher volume trading ranges, rather than distributing liquidity uniformly along the price curve of trading pairs as was done in the previous version. The new version also provides four new trading fee tiers of 0.01%, 0.05%, 0.25%, and 1%, unlike V2’s standard 0.25%.
PancakeSwap expects every token pair to have liquidity pools for each tier, with asset pairs being drawn to tiers where incentives for liquidity providers (LPs) and traders align.
The approach aims to balance between traders targeting the lowest fees while still incentivizing LPs. Assets such as stable pairs, where impermanent loss is low, and prices typically match, fall into the 0.01% tier, while higher percentage trading fee tiers cater to assets with higher impermanent loss or lower liquidity, providing more fee revenue and incentives for LPs.
PancakeSwap is a popular DeFi protocol that caters to a broad DeFi user base, accounting for over $2.5 billion of total value locked and serving over 1.5 million unique users.
The platform is working on upcoming features, including a trading rewards program that incentivizes traders with exclusive benefits and a position manager feature that aims to improve user experience when depositing tokens as liquidity.
The upgrade comes amidst an ongoing hype surrounding DeFi protocols. PancakeSwap’s new version reflects the growing popularity of DeFi and the need for improved performance and lower fees.
The release of version 3 is a welcome move, as DeFi protocols have faced increased scrutiny from regulators worldwide. The upgrade is expected to attract more users to the platform, given PancakeSwap’s reputation as one of the most popular DeFi protocols.
In March, Arbitrum (ARB) was in the limelight in DeFi-related news. Its highly-anticipated airdrop saw around $3.3 million consolidated from over 1,400 addresses into two controlling wallets.
DeFi protocols such as PancakeSwap have a growing user base, and the release of version 3 is expected to increase their popularity further.
Pancake Swap Version 3
In conclusion, PancakeSwap’s release of version 3 of its automated market maker platform on BNB Chain, Aptos, and Ethereum with enhanced capital efficiency and lower fees is a welcome move in the growing DeFi sector. PancakeSwap is expected to attract more users to its platform, and its upcoming features are set to further improve its user experience.