Minter 2 vs. Uniswap v3
The Minter network is undergoing a major upgrade on April 12, 2021. Its main goal is to lay down a unique infrastructure for decentralized trading, cross-chain transfers, and DeFi earning opportunities (for liquidity providers, traders, lenders, and borrowers alike).
This upgrade will bring Minter closer than ever to fulfilling its original vision for an efficient, blockchain-powered Internet of Money architecture.
Minter 2 is based on DEX mechanisms along with automated market makers and on-chain limit orders. Users will be able to trade in leading digital assets and currencies in a cost- and time-saving way, keeping complete control over their funds.
Watch Sergey Klimov, a person who plays a central role in designing the upcoming upgrade, speak about Minter 2’s technical aspects:
Last week, developers behind a decentralized digital asset exchange protocol Uniswap have announced that a new version of their product is scheduled to launch on May 5. Our core team has studied the announcement carefully and would like to share its findings in this comparative review of Minter 2 and Uniswap v3.
The main improvement to Uniswap protocol that comes with v3 is that liquidity providers will be able to set price ranges within which they want to supply liquidity. This innovation is called ‘concentrated liquidity.’
Providers’ individual positions are merged into a single pool, forming a combined curve for a specific range of prices where trading takes place. From our point of view, this feature is critical because it gives liquidity providers better control over their funds and how those funds are used by other participants of the automated trading process.
In his recent tweet, Uniswap founder and developer Hayden Adams says he’s sorry he hasn’t been active enough in delivering the main message of the protocol’s soon-to-be-released version.
Indeed, Uniswap’s current fees are a great pain for both participants and regular users. And unfortunately, v3 is not very specific about solving this problem, to the extent that Adams had to step in and give additional emphasis and explanations.
We agree that the size of fees and costs for making swaps and transfers on decentralized platforms is the key element of the DeFi market. On that note, we’re getting started with our comparison of Minter 2 and Uniswap v3.
Minter 2 vs. Uniswap v3: Fees
There will be three tiers of fees in Uniswap v3–0.05%, 0.3%, and 1%. The degree of risk that liquidity providers take depends on the volatility of the pair.
For example, ETH/DAI is much riskier than USDC/DAI. Uniswap developers expect that most of the pairs will calibrate to an obvious tier — 0.05% for same-type assets, 0.3% for pairs like ETH/DAI, and 1% for exotic, highly volatile pairs.
Transaction costs on the Ethereum network have been peaking recently, averaging at $50 per exchange operation. In times of great hype, when some breaking news is out and the assets are on the move, fees often reach levels that are just mind-blowing.
Keep in mind that every swap requires two transactions, Approve and Confirm.
For example, daily fees volume on Uniswap topped $4.8 million on March 28, 2021. It’s 35% more than all fees on the Bitcoin network for the same period. Ethereum is the absolute leader with $16.5 million worth of 24-hour fees.
On Ethereum and Uniswap fees in short:
Miners are raving, traders are raging.
In Minter 2, fees will stand at 0.2% on the volume exchanged. Costs for exchanging the tokens are fixed in U.S. dollars at $0.03. Unlike in Ethereum, a swap requires just one transaction. This means you can forget about trading expenses and will always be able to forecast your trades.
The transfer fee will be a constant, USD-denominated value as well. It can be paid in any coin but will never exceed $0.01 in dollar terms.
It’s about 10,000 times more profitable to swap and transfer via Minter 2 than Uniswap v3.
To be fair, we should note that developers of the Uniswap v3 protocol have high hopes of Optimism, an L2 scalable deployment on the Ethereum network that’s likely to make transactions significantly cheaper. It’s yet to be seen if Ethereum miners are ready to reduce their incomes by 10,000 times in order to compete with Minter 2.
In Uniswap, for each transaction, gas should be paid in the base coin, which is ETH. This means that to make a swap, traders need to keep ETH on their balance because otherwise, they’d have to buy it, paying additional fees along the way.
In Minter 2, fees can be paid in any coin. If someone’s sent USDC to your Minter wallet, you can freely move and exchange it and pay the fees in the same coin. That’s one-of-a-kind.
In Uniswap, the speed of exchange comes down to Ethereum block time (≈15 sec.) * No. of blocks needed for finalization (12). Besides, there are two actions you need to take (Approve and Confirm). Normally, if the amount of gas is sufficient, the swap can be done in a couple of minutes. If the gas is rising with transactions still unconfirmed, waiting times may rise, too — up to tens of minutes or sometimes, even hours.
In Minter, it takes five seconds for a transaction to confirm and block to be final. It’s not just that transactions are fast, but blocks are also instantly final. This means you no more have to wait to make sure your transaction can’t be deleted from the blockchain. On top of that, swaps are made in a single transaction — unlike two in Uniswap — saving you both time and money you would otherwise have to spend on transaction costs.
Concentrated liquidity is considered the main innovation of Uniswap v3. This functionality will allow LPs to provide liquidity within certain price ranges inside the pool. That way, the efficiency of capital may increase, lowering the slippage for traders. If the market price is beyond a specified range, provider’s liquidity is removed from the pool and stops earning on fees. There is also a theoretical possibility that within some of the ranges, there’ll be no liquidity at all.
Another new feature of Uniswap v3 is range orders for liquidity providers. LPs may deposit one token into a customizable range above or below the current price — if the market price falls within, they sell one asset for another along a smooth curve, getting a swap fee as well. Depositing into a narrow range reminds of traditional limit orders.
Minter will see the arrival of On-Chain Automated Market Maker with Order Book, or AMMOB. Traders will be able to place limit orders that will execute using the FIFO method. Compared to the usual AMM pools, AMMOBs have better liquidity as in some areas, the price curve becomes a horizontal line.
The AMMOB’s distinctive feature is that the 0.2-percent fee charged for filling the limit order also goes to liquidity providers. This means that LPs generate additional income even when their funds aren’t used directly.
See Minter lead dev Daniil Lashin’s detailed presentation about AMMOB:
Other Advantages of Minter 2
- Minter Hub oracles receive up to 1% of the fees charged for all transfers between the Minter, Ethereum, and Binance Smart Chain networks. They are paid out proportionally to the oracle’s HUB stake. Learn more: https://medium.com/@MinterTeam/hub-token-of-the-minter-hub-blockchain-69a3f2605ffd.
- Traders save on fees for cross-chain transfers by simply holding HUB on their balance.
- Liquidity pools can be created for LP tokens also. This means that any pool’s LP token can have its own value and be bought, sold, or sent to any address.
Although Adams may be right and Uniswap fees will be low from now on, they will never be nearly as low as in Minter 2.
Summing Up: Why Exactly Is Minter Better than Uniswap?
- Low fees. Like, super-low fees. In Uniswap v2, fees for making a swap sometimes reach the astronomical level of $100, while in Minter 2, they’re always $0.03 (what’s more, they’re fixed in USD and not in the blockchain’s native coin).
- Fees payable with any coin. If someone’s sent USDC to your Minter wallet, you can freely move and exchange it, paying the fees in the same coin. That’s one-of-a-kind. In Uniswap, you’ll need to purchase ETH and keep it on your balance in order to pay for the transactions.
- AMMOB. In Minter 2, you’ll have the ability to place limit, fixed-price orders that will be executed according to FIFO. With concentrated liquidity, Uniswap v3 can emulate similar functionality, but you’ll have to withdraw liquidity beforehand so that the order doesn’t get canceled once the price goes back down.
- Extra earnings for LPs. A standard, 0.2-percent fee that is charged for all AMMOB orders goes to liquidity providers. This means that LPs generate additional income even when their funds aren’t used directly.
- All transactions are confirmed and all blocks are final in five seconds. In Minter, fast transactions go bundled with instantly final blocks. This means you’ll no longer need to wait until you can be sure that your transaction won’t be deleted from the blockchain.