Layer-2 Uniswap Port Launched to Quell Rising Gas Costs

Ethereum scaling solutions provider Offchain Labs has announced its own port of Uniswap called Arbiswap which demonstrates Layer 2 (L2) scaling solutions for the world’s most popular decentralized exchange. In mid-October, the firm announced the first and only fully-featured EVM-compatible Optimistic Rollup called Arbitrum. After an initial testing period, it has now deployed this scaling technology to its new Uniswap port.

We couldn't wait to try out Uniswap on Layer 2.

So we went ahead and built it on Arbitrum Rollup.

Introducing 🦄Arbiswap🦄https://t.co/Rvu1K3bC9ohttps://t.co/JMPsa5vqy2

— Offchain Labs (@OffchainLabs) November 5, 2020

Making a Cheaper Uniswap

The scaling tech employed is an optimistic rollup that essentially works by moving transactions off-chain onto an L2 sidechain which is secured by the mainnet. This results in much faster throughput since some of the work is being conducted off the main chain. With increased speed comes cost reductions and Arbiswap is boasting a 55x cost saving. For comparison, token swaps on Layer 1 Uniswap cost about 110,000 gas considering 10 million gas per block and roughly one block every 13 seconds. This equates to around 7 swaps per second with L1 Ethereum, and prices are still rising under heavy demand. The Arbiswap rollup chain can reduce the cost to 1,965 gas per swap, meaning that it can handle up to 390 swaps per second, the blog post added. It continued to state that the next Arbitrum testnet release will include further gas-saving and compression features;

“This is not a proof of concept, or something that looks like Uniswap. This is a complete, fully functional Uniswap V2 in all of its glory, running on rollup.”

A token bridge has been integrated into the user interface which allows ERC-20 tokens to be transferred to the rollup chain and back again. Arbiswap also works with three different wallets; Metamask, Fortmatic, and Portis. The demo has been deployed to show how easy it is to run L2 solutions on Uniswap. The DEX has done something similar with its own L2 protocol demo called Unipig which was built using Optimistic Rollup in collaboration with Plasma Group and is capable of around 250 transactions per second.

TVL and Token Price Update

Uniswap remains the undisputed leader of the DeFi TVL charts with $2.8 billion in value locked, giving it a market share of 23% according to DeFi Pulse. The majority of that collateral is sitting in the four ETH liquidity pools earning UNI tokens until Nov 17. UNI token prices on the other hand have declined along with virtually every other DeFi-related token. UNI is currently trading at $2.39, up 23% since yesterday’s open. On the other hand. it is still down 66% from its peak in mid-September.