PancakeSwap, a leading decentralized exchange, or DEX, with a user base of over 1.5 million users, announced the launch of Version 3 on Monday. The upgraded platform will operate on both the Ethereum and BNB Chain networks and promises to offer the lowest fees for on-chain trades among its counterparts such as Uniswap and SushiSwap.
The new version introduces several features aimed at enhancing capital efficiency on the platform. These features include allowing liquidity providers to concentrate their capital on smaller price ranges, resulting in higher fee earnings from the same amount of deposits.
PancakeSwap V3 will also introduce four different trading fee tiers, ranging from 0.01% to 1%. V2 offered only a single tier of 0.25%. The exchange will create a liquidity pool for each fee tier, with asset pairs gravitating towards the tier where incentives for both liquidity providers and traders are most rewarding.
In addition, PancakeSwap V3 will offer two new features in the future. The first feature, a V3 “VIP” trading rewards program, will reward traders for their trading volume with exclusive benefits such as up to a 5% trading fee rebate, which could increase the platform’s activity and revenue.
The second feature, a position manager, will allow traders to deposit liquidity and optimize that position over time, based on fees and rewards. The tool will eliminate the need for manual calculations for third-party integrations, enabling users to automatically adjust their positions and earn fee rewards while staying within range.
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