Author: Jack Inabinet, Senior Analyst at Bankless; Translation: Xiaozou from Golden Finance
Unichain has been released and has the potential to quickly become the liquidity center of cryptocurrency. Built on the OP Stack, Unichain will support the much-anticipated UNI fee switch through staking functionality, while also reducing transaction wait times and addressing the fragmentation challenges posed by Ethereum's rollup-centric roadmap.
This was the vision laid out by Uniswap founder Hayden Adams and Optimism contributor Karl Floersch when they told Bankless about what’s next for Uniswap and their hopes for interoperable Ethereum.
Crypto proponents have long speculated on what role application-specific L2s can play in the Ethereum scaling war without compromising decentralization. With the launch of Unichain, the time has finally come to test how general-purpose applications perform in an isolated execution environment.
In this article, we’ll explore Uniswap’s big leap and what impact it has on the future of DeFi.
1. Introduction to Unichain
Uniswap is the backbone of Ethereum DeFi applications, and Unichain is the latest version of this important token exchange protocol. The goal of Uniswap developers is to replicate the seamless user experience of monolithic blockchains and create a veritable liquidity center in the crypto space.
Just like Optimism and Base, Unichain will be a permissionless EVM-compatible universal rollup, building a Uniswap deployment on the OP Stack.
While the freshly-launched Unichain testnet is a low-profile proof of concept, the mainnet is scheduled to launch later this year. The network intends to utilize a trusted execution environment (TEE) secured by UNI validators who provide fast pre-confirmations and earn network fees for their services, while reducing user transaction wait times by four times, from 1 second to 200-250 milliseconds, and supporting the long-awaited UNI fee switching feature!
While Ethereum’s decentralization-first design philosophy is indeed laudable, it is undeniable that offloading execution tasks to L2 complicates the user experience by allowing assets and protocols to be dispersed across isolated blockchains. Ethereum must address the fragmentation issues brought about by its rollup-centric roadmap to support L2 interoperability if it wants to achieve mass adoption.
Efforts to revolutionize L2 interoperability go far beyond the scope of Unichain construction and require the adoption of new Ethereum-wide interoperability standards, such as the unified cross-chain transaction execution EIP and interface improvements in wallet-chain switching and asset balance display.
Unichain-supported swaps from alternative networks still require time-consuming bridge transactions, but the proposed OP Stack native interoperability promises to reduce bridge latency and transaction costs within the OP Stack.
2. Superchain Advantages
Since Unichain adopts the OP Stack standard, any "Superchain" rollup built on this framework can easily implement the above technical improvements, bringing positive impact to the broader OP ecosystem by reducing transition waiting time and enabling functional native token staking functions.
Interoperability between rollups under shared standards is easiest to achieve, and while Ethereum’s array of competing rollup frameworks has led to the technical heterogeneity of rollups today, the potential synergies created by developing on the most popular stack naturally promote a winner-takes-all situation.
Once advanced rollup features like shared ordering and native interoperability become available, the advantages of building within the unified stack will become very clear, meaning that any L2 deployer looking to leverage their own L2 liquidity hub must consider Uniswap’s decision to build on the OP Stack during the rollup stack selection process.
Since many OP Stack chains invest a percentage of sorter revenue into the Ecosystem Traceability Public Welfare Fund (RPGF) project, increased ecosystem activity will translate into more funds that can be used to create and promote standards consistent with Optimism.
If Unichain’s ambition to become a hub for crypto liquidity is truly realized, this experiment will establish the Optimism OP Stack as a ace rollup framework while clearly justifying Ethereum’s rollup-centric roadmap.
3. Impact on the future of DeFi
Imagine Unichain becoming the liquidity hub for Ethereum, where free market dynamics would dictate that most on-chain swaps are automatically routed through the network, as its deep liquidity would reduce slippage and deliver the best trade execution.
Assuming Unichain can replicate the success of the Uniswap exchange at the network level, the chain will also become a stronghold for high-performance DeFi applications, where high-level players like institutional market makers can benefit greatly from the shortest transaction waiting times and the best execution prices.
Still, even with OP Stack native interoperability, trading on the unified crypto network has always been faster and cheaper, which means Unichain must have the deepest liquidity and best execution price for a given trading pair to be considered an exchange solution.
Despite L2 processing 22x more transactions than Ethereum, we found during our analysis that up to 80% of Uniswap’s TVL is still stored within its Ethereum smart contracts. Although Uniswap is free to deploy Unichain, this does not mean that liquidity providers will also migrate.
There has been talk of Uniswap application chains for a long time, and many people in the Ethereum community have expressed deep doubts about the feasibility of this model. Now that Uniswap’s grand vision for Unichain has been made public, we will soon see who is right.