SushiSwap, a popular decentralized exchange (DEX), is launching its concentrated liquidity pools on 13 networks, per a recent statement.
SushiSwap’s Concentrated Liquidity Pools
This marks the most comprehensive deployment of concentrated liquidity pools, or V3 pools to date, and SushiSwap is the first DEX to offer such a broad coverage.
Concentrated Liquidity, everywhere.
Capital Efficiency, anywhere.🔥 We have launched Sushi’s concentrated liquidity pools on 13 networks with more coming #soon. This launch marks the largest deployment of v3 pools, ever.
📖: https://t.co/NXW8QjFAkB
🌐: https://t.co/nJoKLALNZ7 pic.twitter.com/E8RdeyQff7— Sushi.com (@SushiSwap) May 4, 2023
SushiSwap’s v3 pools offer several advantages over traditional liquidity pools. By concentrating liquidity in a smaller price range around the current market price, the potential for impermanent loss is reduced, allowing liquidity providers (LPs) to supply liquidity to within a narrow range, subsequently delivering greater capital efficiency.
Concentrated liquidity pools are designed to optimize the trading experience for traders and LPs. This reduces the spread between buy and sell orders, resulting in lower slippage for traders and greater capital efficiency for LPs.
SushiSwap also revamped its user interface for easier navigation. This, they said, would make it easier for users to access their positions and manage their trades more effectively. Moreover, the v3 release includes a new route processing contract for SushiSwap’s in-house smart order routing system, which unifies liquidity pools across all of SushiSwap. This enables pools to interact with each other, effectively creating a large pool ecosystem of liquidity to trade against.
The Road Ahead
The launch of v3 pools on 13 networks is just the first step towards increasing the adoption of concentrated liquidity.
In the next few weeks, SushiSwap plans to launch its comprehensive, nearly 30-concentrated liquidity network support in two phases.
The first phase will roll out v3 across 13 networks, with more coming soon, ultimately covering all 30 chains live on SushiSwap. Additionally, SushiSwap plans to deploy its full DEX to zero-knowledge rollups soon.
In the second phase, SushiSwap will introduce a unique rewards program for the most efficient LPs. With this program, LPs will be eligible to receive additional $SUSHI as rewards. The rewards program will kick off on Ethereum, Arbitrum, Optimism, and Polygon, and will be rolled out as more chains get added.
SushiSwap’s launch of v3 pools on multiple networks raises the question of whether other DEXs will follow suit. The advantages of concentrated liquidity pools are clear, and SushiSwap’s broad coverage of v3 pools gives it a significant edge over its competitors.
Still, despite the launch, SUSHI, the native token of SushiSwap, is trading lower. The token is down 20% from April 2023 highs when writing on May 6.
As the adoption of concentrated liquidity pools grows, the focus would be on how other DEXs respond and whether more will fork Uniswap v3’s code. The Uniswap v3 business license expired in early April.
PancakeSwap, a popular DEX on the BNB Smart Chain (BSC), was the first to fork Uniswap v3, releasing PancakeSwap v3 in April.