DeFi: New UniswapX aggregation protocol and its order-based architecture; RISC Zero, a ZK virtual machine developer, raises $40MM
Uniswap rivalling centralised exchanges (CEXes) like Coinbase, Bybit, and OKX in trading volume, even surpassing KuCoin and Kraken
Gm Fintech Futurists —
Today we highlight the following:
DEFI AND DIGITAL ASSETS: Introducing The UniswapX Protocol (link here)
PROTOCOLS: ZK Virtual Machine Developer RISC Zero Raises $40MM in Series A (link here)
CURATED UPDATES
To support this writing and access our full archive of newsletters, analyses, and guides to building in the Fintech & DeFi industries, subscribe below.
DeFi Short Takes
DEFI and DIGITAL ASSETS: Introducing The UniswapX Protocol (link here)
Decentralized exchange (DEX) Uniswap has unveiled UniswapX, a non-custodial Dutch auction-based trading aggregator. UniswapX aggregates on-chain and off-chain liquidity, internalises MEV through price improvement, offers gas-free swaps, and can be extended to support cross-chain trading. The update comes shortly after Uniswap launched V4 of its protocol.
New Layer 2s, protocols, and the influx of customised pool designs on Uniswap v4 have all contributed to the issue of liquidity fragmentation — money is literally in different places. Liquidity fragmentation arises from multiple DEXs or liquidity pools, each offering different assets and trading pairs. This leads to varying asset prices on different platforms, requiring traders to search across venues for the best price manually, ultimately resulting in market inefficiency.
On-chain routing, the process of connecting these fragmented sources, is increasingly challenging from both a technology and market perspective. Routing systems have to find the optimal route for trade execution, minimising slippage (difference between expected and executed prices) and reducing transaction costs (i.e. gas fees).
To address the on-chain routing challenge, UniswapX introduces "orders". When swappers use the Uniswap Protocol, they create and sign transactions, which are sent to the mempool (memory pool), a temporary storage area for pending transactions in the blockchain network. Note that the word “sign” means to permission a transaction for execution using your crypto wallet.
In UniswapX, swappers (Uniswap users seeking to trade tokens) sign orders (i.e., provide a set of instructions specifying details for their trades) that includes information like input and output tokens, desired amounts, starting output and input amounts, and more. These orders are then picked up by "fillers," which include Maximal Extractable Value (MEV) searchers. Once the fillers source the assets, the executor contract sends them to the swapper while pulling funds from their addresses, guaranteeing swappers the best price.
UniswapX also leverages "Dutch orders," similar to Dutch auctions, creating competition among fillers to get the best price for the swapper. Unlike ordinary limit orders that always execute at a fixed limit price, Dutch orders execute at a price that depends on when they are included in a block — helping fillers to make the most of MEV. UniswapX envisions extending its capability to support cross-chain trading.
Another focus of UniswapX is that crafting Ethereum transactions can be complicated, requiring interaction with smart contracts while holding assets to cover gas fees. This complexity results in suboptimal UX and efficiency loss due to limited access to information and execution strategies.
UniswapX's "orders" system, resembling intents, improves the process for end users. Intents are similar in concept, providing a signed set of rules that let users outsource transaction creation to others. For example, a standard swap transaction could look like "Swap 2 ETH for at least 3850 DAI on the 20bps fee DAI-ETH Uniswap V3 pool, valid until timestamp 1698547362." In other words, UX hell. Whereas an intent would be much simpler, like: "maximise DAI bought, constraints: 2 ETH sold."
In summary, Uniswap's V4 update brought a new kind of smart contract called "hooks," allowing developers to add their features to existing liquidity pools. Now, the DeFi protocol continues to optimise the on-chain trading experience through cross-chain interconnectivity and improvements to efficiency and UX. We’re not surprised to see Uniswap rivalling centralised exchanges (CEXes) like Coinbase, Bybit, and OKX in trading volume, even surpassing KuCoin and Kraken. As feature sets broaden and with the ongoing lawsuits against Binance and Coinbase, we may soon start to see the mainstream shift from CEX to DEX.
👑Related Coverage👑
PROTOCOLS: ZK Virtual Machine Developer RISC Zero Raises $40M in Series A (link here)
RISC Zero is the latest player in the zero-knowledge game, raising $40MM in a Series A round led by Blockchain Capital and joined by Delphi Digital, Alchemy, Galaxy digital and others. A reminder that zkEVMs are currently all the rage — ConsenSys’ Linea launched this month and Polygon zkEVM in March — and there are plenty more competitors vying to become the rollup of choice. These protocols provide cheap and fast transactions at scale, enabling transactions that anchor to the underlying security of Ethereum without the hefty gas cost or delay.
Working alongside fellow zkEVM provider Starkware, RISC Zero’s approach differs from competitors — it is building a zkVM (zero-knowledge Virtual Machine) instead of a zkEVM. Virtual machines are simulated computers, in simple language. The zk part represents privacy by design.
The key difference to other rollups is that zkVMs are designed to be chain-agnostic, with no reference to blockchain constructs like wallet addresses. In turn, this allows for developers to create dApps in any blockchain coding language, such as C++, Go and Rust, increasing accessibility for developers. Developer growth is the lifeblood of Web3 and precedes consumer app usage.
Powering the zkVM is the Bonsai computing platform — a set of tools that enable high computational throughput when developing dApps. It removes a range of complexities for developers, like proof orchestration and server infrastructure, making dApp development quicker and easier. In effect, it allows for developers to build on any chain and in any language, making it easier for the zkVM to garner many dApps, which it hopes will lead to an engaged and sizeable community.
All in, we like the improvements in accessibility and ease of development, although the strategy relies on a world where multiple L1s co-exist. If Ethereum continues to be the dominant L1, with app-chain ecosystems built on top, then there may not be the need for dApps to leverage other L1s. The jury is out on how the L1 space will shape up, but we think RISC Zero is well positioned to bootstrap a differentiated ecosystem. The hurdle now is attracting net new developers.
👑Related Coverage👑
Curated Updates
Here are the rest of the updates hitting our radar.
Financial Institutions and Adoption
⭐ Bitfinex Hackers Agree To Forfeit Billions In Bitcoin In Plea Deal - Decrypt
Crypto Wallet Provider Gnosis Launches Self-Custodial Visa Debit Card - Decrypt
FalconX Leverages BlackRock’s Index Provider For Crypto Derivatives - Blockworks
Bank of Italy Taps Polygon for Institutional DeFi Pilot - The Defiant
Founder Of Defunct Midas Investments Launches New DeFi Investment Platform Locus Finance - The Block
DeFi and Digital Assets
⭐ Avalanche Doubles Down On Asset Tokenization With $50MM Fund - The Defiant
Starkware’s New Appchain Attracts DeFi Derivatives DEX With CeFi Liquidity - Blockworks
Utopia Labs Enables USDC ‘Transfers’ To US Bank Accounts - The Defiant
Aave Companies Launch V2 Lens, Introducing 'Blocking' To Crypto Social App - Decrypt
Latest 'Auto-Burn' Removes $480MM Worth Of BNB From Circulation - The Block
Blockchain Protocols
⭐ Crypto Firm Flashbots Raises $60MM In Paradigm-Led Round - CoinDesk
See here to read our short take on this.
⭐ Solana Foundation, Polygon Lead $30MM Fundraise For Web3 Firm Cosmic Wire - CoinDesk
First Shared Sequencer Tech To Go Live On Polygon zkEVM Testnet - Blockworks
Layer 2 Network zkSync Era Upgrades Proving System - The Defiant
Wormhole Launches New Blockchain Connecting To Any Cosmos Appchain - CoinDesk
Bitcoin Miner Hive Is Using Old Ethereum Rigs and AI To Make Ordinals Art - Decrypt
Coinbase’s Base Wants To Have ZK-Proofs Alongside Optimistic Rollups - The Block
NFTs, DAOs and the Metaverse
⭐ OpenSea Makes ‘Deals,’ Launches Peer-to-Peer NFT Swaps - CoinDesk
⭐ MetaMask To Support Cross-Chain Interactions With 'Snaps' By 2024 - The Defiant
Reddit Brings In Good Karma With Gen 4 Collectible NFT Avatars - CoinDesk
OpenSea-Backed Americana Makes Its 'Phygital' Vault Service Available To The Public - Decrypt
Unstoppable Domains Chooses Integration Over Competition With ENS - Blockworks
Kevin Rose’s a16z-Backed Moonbirds Launches 200-Day Reveal Of New Collection - The Block
Shape your Future
Wondering what’s shaping the future of Fintech, Digital Wealth and Web3?
At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete in Fintech.
Sign up to the Premium Fintech Blueprint newsletter and get access to:
Monday Fintech Short Takes, with weekly coverage of the latest fintech, digital investing, banking, and payments news via expert curation and in-depth analysis
Wednesday Long Takes on Fintech and Web3 topics with a deep, comprehensive, and insightful analysis without shilling or marketing narratives
Thursday DeFi Short Takes, weekly analysis of developments in the crypto space, including digital assets, DAOs, NFTs, and institutional adoption
Access to the Podcasts with industry leaders on building leading companies in Fintech and DeFi along with value-added data-driven, annotated transcripts
Full library of the weekly in-depth write-ups on 15+ topics and 50+ Fintech and DeFi brands, offering deep, comprehensive, and insightful analysis without shilling or marketing narratives
Exclusive Deep Dive reports into Fintech business models and brands that transform the Fintech and DeFi space
Access to our CEO & Founder focused 'Building Company Playbook' series, offering insider tips and advice on constructing successful fintech ventures.
Please
Bonjour combien de temps mes mon argent pour être sûr mon compte svp merci