It’s time for Uniswap v3 to launch on @avalancheavax

After consulting with @avalabsofficial, we @UMichBlockchain have released a proposal on the Uni forums describing why this deployment is important

Let’s break down the proposal step by step👇
The urgency behind this proposal is due to the impending license expiration

After April 1st, anyone can legally fork Uni v3 code and use it for commercial purposes

Large chains like Avalanche will see a rapid influx of v3 copycats

This will dilute the market on those chains
So it’s paramount for Uniswap v3 to get ahead of the competitors by launching on large chains before duplicates arise

On Avalanche specifically, we know that duplicate chains will spring quickly because it already has lots of liquidity ($950M TVL) and innovation (281+ protocols)
One of the reasons for Avalanche’s continual growth is its novel architecture

It is broken into three parts: P-Chain, C-Chain, & X-Chain

This 3-pronged setup optimizes for scalability and interoperability
The three chains compose a consortium of validators called the Primary Network

It is responsible for Avalanche’s security

Plus, the security easily compounds because increasing the # of validators does not sacrifice block time

This allows for higher decentralization over time
In Q4 2022, Avalanche’s Nakamoto coefficient increased from 30 to 32

This surpass most other L1s

Plus, the chain currently touts a whopping 1,226 validators & over 233M AVAX tokens staked

These are all signs of a robust L1
Avalanche also permits high scalability via its ecosystem of subnets

Like Ethereum’s L2s, subnets allow for outsourcing blockspace from the Primary Network to alternative blockchains

As congestion increases on the EVM-compatible C-Chain, projects will create their own subnet
The beauty of subnets is that they enable launching application-specific blockchains w/t full customizability

This grants builders control over their dev stack

All subnets can specify their own execution logic, fee regime, state, networking, and security
Large protocols that initially relied on the C-Chain are now migrating to their individualized subnets

Notable examples of this are @DeFiKingdoms and @StepApp_

And as more subnets join the network, Avalanche’s security simultaneously increases
Avalanche also has a strong user base

Although daily active users remained relatively steady since Summer 2022, average daily transactions increased from ~1M to ~3M

This indicates the emergence of power users
However, Uniswap would not be without competition

Post deployment, the most fierce competitor on Avalanche for Uni v3 will be Trader Joe

In a single day this week, @traderjoe_xyz saw nearly $100M in volume
But this level of activity only illustrates Avalanche’s DeFi market size

Even though Trader Joe v2 is equipped with a concentrated liquidity mechanism comparable to Uni v3, Uniswap has a stronger, more established brand

This allows Uni to attract liquidity from existing DEXs
A notable anecdote is when Uni v3 launched on @0xPolygon

After deployment, Uniswap quickly acquired market share from both @QuickswapDEX and @SushiSwap

Although this experiment is yet to be tested on a large alt L1, it is likely that a similar pattern will surface on Avalanche
Apart from DeFi activity, Avalanche has also made strides in sectors like gaming, NFTs, and user adoption

Further innovation in each of these categories is enabled by a DEX like Uniswap

And in turn, Uniswap stakeholders will attain value from the protocol’s increased usage
Avalanche NFT Progression in 2022:

- @opensea launched natively on Avalanche

- NFT Minter app (built on Avalanche) integrated with @Shopify

- @joepegsnft, an NFT marketplace, launched in Q2 2022 and became the most used NFT market on Avalanche (50+ projects onboarded)
Avalanche Gaming Progression in 2022:

- Numerous subnets for gaming launched

- @DeFiKingdoms subnet generated 1-2M txn/day in Q4 2022

- @swimmer_network subnet integrated @snakecity_io & @PlayCrabada

- Japanese media company @GREEgames partnered with Avalanche to build games
Avalanche User Adoption in 2022:

- Ava Labs enacted developments for Avalanche's multichain wallet, @coreapp

- Fiat onramps have been added to Core using Coinbase Pay

- Core Web and Mobile released, allowing for seamless navigation of Avalanche's ecosystem
Now what about the bridge?

How should we address cross-chain messaging?

We propose using LayerZero, an omnichain bridging solution, to facilitate cross-chain message passing between Ethereum and Avalanche
Although the Uni DAO previously voted to use @wormholecrypto for the BNB Chain deployment

We believe that such a decision should not set a precedent for future bridge selection

We need to try our hand at testing out different, reliable bridges
A handful of Uni delegates and tokenholders have also pioneered a new messaging system

Using this setup, cross-chain governance relies not on a single bridge but simultaneously on a handful of bridges
Yes, we see the merits of a multi-bridge system

But it may take some time for this approach to garner adoption and be fully vetted

The Uni DAO can decide to opt into a multi-bridge system in the future

But for an agile deployment, we believe that LayerZero is the best solution
Another reason for using LayerZero is their existing relationship with Avalanche

The first use case of Omnichain Fungible Token (OFT) transfer has been active for nearly 4 months on Avalanche, enabling a composable, unified liquidity system for BTC
The LayerZero-Avalanche relationship is in part why @LayerZero_Labs has volunteered to take care of the technical deployment of v3 on Avalanche

Again, our goal is for this process to take the path of least resistance due to the timely nature of the proposal
But is LayerZero safe to use?

In short, yes.

- LZ is supported by thousands of cross-chain builders w/t over 2k contracts deployed on mainnet
- Has ~700 unique apps
- ~2M total messages
- ~$5B txn volume
- And billions of dollars in TVL
The two main components for LZ messaging are the Oracle and the Relayer

The Oracle sends block headers from the source chain to the destination chain

The Relayer sends txn proofs from the source chain to the destination chain
The Oracle and Relayer work together to pass messages between chains

But the underlying assumption behind this model is that the two entities don’t collude

If they do, then the entire system falls apart

So what makes sure that they don’t collude?
Unlike other bridges, LZ doesn’t pose an economic stake or bond to punish malicious actors via a slashing mechanism

Instead, if the default oracle-relayer configuration is compromised, then there is a reputational backlash for those running the Oracle and Relayer
With a default configuration, LZ runs the Relayer

And Chainlink runs the Oracle

The Chainlink DON would have to actively collude with the LayerZero Labs Relayer at the same time to enable passing of a malicious message
If LZ and Chainlink collude, then both will take an enormous hit to their reputations

This makes the incentive of collusion minimal

Plus, if Uniswap does not want LZ or Chainlink to run either one or both of the Relayer or Oracle, Uniswap can do so itself
LZ code is also set in stone

The smart contracts are not upgradable

This is a big deal since most exploits occur due to bugs in code–not due to malicious actors colluding

And the easiest way to introduce new bugs is to upgrade the baseline code
It’s therefore important for the current code to be pristine

How do we judge code to be bug free?


LZ has been audited over 35 times AND reviewed numerous times internally by the @LayerZero_Labs team
Plus, LZ’s current track record is very clean

They’re the only major cross-chain messaging protocol with billions in TVL to not be exploited

And as a further safeguard, LZ has the largest live bug bounty program in the industry ($15M)
So, because of Avalanche’s continual expansion and growing DeFi ecosystem, along with LZ’s robust cross-chain messaging architecture, we believe that it’s finally time for @Uniswap to deploy on Avalanche
Special thanks to @luigidemeo from Ava Labs & @IreneWu27 from LayerZero Labs for their aid in this proposal

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More from @abdullahbumar

Feb 5
Crypto governance is a lot more political than you think

Right under our noses, a dramatic battle played out between @wormholecrypto and @LayerZero_Labs last week

Where did this take place?

On the Uniswap forums

Let’s break down the politics behind the recent proposal👇
It all started in December

@ILIA_0x released a proposal draft about launching Uniswap v3 on @BNBCHAIN

The reason behind this proposal was to ensure that Uniswap became the de facto DEX on BNB Chain prior to Uniswap’s license expiration–even taking over @PancakeSwap
What is the Uniswap license?

In short, Uniswap put in place a Business Source License in 2021 to prevent others from forking their source code

The license expires this April

After April, anyone can copy and paste Uni v3 code onto BNB Chain (or any other chain) and make $$$
Read 32 tweets
Jan 25
We are in the midst of a tug-of-war between numerous L2s, each claiming to bring higher degrees of efficiency and lower txn costs

So how do these L2s differentiate themselves?

By identifying a niche to dominate via unique, tactical methods

Today’s L2 of interest: @bobanetwork
General-purpose L2s w/o major differentiation leads to an oversaturated market

We have seen this previously with L1s. Every new L1 claims to be an “Ethereum killer”…but to no avail…we all know who is king
The same principle of avoiding market saturation applies to L2s

Although we will see one or two successful general-purpose L2s, it is more likely that L2s as a category will truly succeed if they aim to provide unique, special-purpose features
Read 23 tweets

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