Pancake Swap V3 Launch
If you have been around in the sector for quite some time you will be familiar with one of the most popular decentralised exchanges (DEX) Pancakeswap that is built on the Binance Smart Chain. Having survived many sector changes PancakeSwap continues to be one of the preferred ways to swap crypto assets outside of centralised exchanges.
Even our very own CUB Finance utilises the benefits of PancakeSwap and has provided many on Hive with the ability to trade assets and be exposed to Decentralised Finance.
PancakeSwap V.3 Roll out
PancakeSwap has recently announced it's version 3 migration and some pretty big changes coming that will see the DEX continue to lead both on Binance Smart Chain and on the Ethereum Network. One of the biggest changes will provide a new earning model that is being called "capital efficiency".
PancakeSwap has rolled out Capital Efficiency due to identifying that most their LP fees were paid uniformly across the price curve however, failed to capture where most the trades were occurring, in stable coins.
As stable coin pools remained at relatively stable price points not moving all that often returns on these pools were low despite having larger trading volume. The new model will enable greater returns for investors providing liquidity in stable pools.
New Tiered Approach to Earning
Another new added feature is the removal of the flat 0.25% earning across all pools with new four tiered approach that will better support where the trades are occurring.
The New tiered fee approach consists of 0.01%, 0.05%, 0.25% and 1% with the 0.01% being applied to stable coin pairs. Where previously all trades on say USDT and USDC where charged 0.25% they will now only incur a 0.01% fee as will popular pairs.
As the tiers increase they are for pairs that have larger impermanent loss or traded less frequently this is to allow investors to reduce their losses and provide a buffer against impermanent loss.
There are many more changes in Version 3 and it looks to once again drive sector reform and combat against some of the problems experienced by Decentralised Finance and mitigate risks associated with provided liquidity pools.
For a full breakdown and list of changes you can find them on the PancakeSwap blog
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