What is v3 in DeFi?

Uniswap v3, a decentralized exchange (DEX) within the DeFi ecosystem, revolutionizes trading by leveraging liquidity providers. These providers contribute their tokens to shared pools, fostering a seamless trading environment for all participants.

The concept of Automated Market Makers (AMMs) like Uniswap v3 has gained significant traction in DeFi. Their appeal stems from their ability to offer heightened flexibility in comparison to traditional order book-based exchanges.

AMMs eliminate the need for a centralized authority to match buyers and sellers, resulting in reduced friction and faster transaction speeds. This feature is particularly advantageous for traders seeking quick executions.

Furthermore, Uniswap v3 and other AMMs offer lower fees compared to centralized exchanges. This cost efficiency attracts users who prioritize minimizing trading expenses while maintaining access to diverse assets.

The liquidity pools created by providers act as a marketplace where traders can buy and sell assets directly, without intermediaries. This direct interaction fosters greater transparency and trust within the DeFi community.