Uniswaps Unveils Layer 2 to Tackle DeFi Limitations: All You Need To Know

• Uniswap is launching its own Layer 2 solution called Unichain.
• Developers have tipped the network to tackle existing DeFi limitations.
• The network features several innovations to achieve these solutions.

The advent of Layer 2 solutions has allowed smaller stand-alone blockchains to tap into Ethereum ‘s deep liquidity. For decentralized applications, however, the ability to launch Layer 2 chains has offered an avenue to optimize user experience.

This is what Uniswap , the largest decentralized exchange by volume, is betting on as it has unveiled plans for its own Layer 2 chain on top of Ethereum. According to the exchange, the solution promises to tackle the current limitations faced by DeFi , i.e. cost, speed, and interoperability. 

Here’s all you need to know!

Uniswap Unveils Unichain

Uniswap is launching its own Layer 2 solution built with Optimism ‘s OP Stack called Unichain, per a press release shared with DailyCoin on Thursday, October 10. The exchange tipped the Layer 2 chain to unlock new markets and use cases with faster and cheaper transactions and improved cross-chain liquidity.

"After years of building and scaling DeFi products, we've seen where blockchains need improvement and what's required to continue advancing Ethereum's roadmap," Uniswap Labs CEO Hayden Adams asserted in the statement, adding, "Unichain will deliver the speed and cost savings already enabled by L2s, but with better access to liquidity across chains and more decentralization."

So, how exactly does this Optimistic rollup differ from other solutions?

A Look Under Unichain’s Hood and What it Offers

In a sea of Layer 2 solutions, Uniswap’s Unichain, leveraging novel innovations, attempts to set itself apart from the competition in three key areas: cost, speed, and interoperability.

According to Uniswap, Unichain will be 95% cheaper at launch than Ethereum, a figure that the exchange tips to increase over time. 

While cheap transactions are not new for Ethereum Layer 2 chains, Uniswap asserts that it will achieve this lower cost while maintaining decentralization, which most other Layer 2 chains have yet to achieve. Uniswap argues that it will achieve this with a soon-to-be-launched decentralized validation network where network participants can validate blocks by staking UNI.

At the same time, Uniswap notes that Unichain will offer users near-instant transactions with a one-second block time, which will eventually reduce to 250 milliseconds. For context, Ethereum has a block time of 12 seconds, while most Layer 2 chains boast a two-second block time. An added benefit of Unichain’s lower block time is that it lowers the value lost to MEV, a form of attack that allows block builders to maximize value by front-running transactions.

The Layer 2 chain achieves this drastically reduced transaction time by leveraging a block builder developed in collaboration with the Ethereum development team Flashbots. At the core of the block builder is what Uniswap calls a trusted execution environment (TEE). Without going into details about how TEE works, the exchange noted that the feature improved transaction ordering transparency in addition to speed and prevented failed transactions.

Meanwhile, Unichain promises to offer seamless cross-chain swapping experiences by leveraging Optimism’s native interoperability for transactions across the Superchain, a multichain network of Optimistic rollups. Beyond the Superchain, Unichain will leverage ERC-7683 , a cross-chain trade execution standard developed by Uniswap and Across Protocol.

Per the Thursday statement, Unichain is already live on testnet , and a mainnet launch is expected later this year. 

On the Flipside 

• It is unclear when exactly Unichain will launch on mainnet.
• While Uniswap continues to expand, it faces the threat of SEC enforcement in the U.S.

Why This Matters

Uniswap is the largest decentralized exchange by volume. The platform’s proposed Layer 2 solution promises to push the boundaries of what is possible in DeFi while offering a user experience that encourages mass adoption.

Read this for more on Uniswap:
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