Uniswap Releases DEX Aggregator Protocol

Uniswap Labs, the company behind DeFi’s leading decentralized exchange, has unveiled its second major product in just over a month.

On July 17, the company introduced UniswapX, an aggregation protocol designed to allow third parties, called “fillers,” to compete to execute users’ trades at the best prices.

The company plans to allow Uniswap’s fillers to facilitate trades across blockchains later this year. It cites protection against maximal extractable value (MEV), and gas-free swaps, as other benefits of UniswapX. In practice, fillers will pay gas fees and factor them into their quotes, but the upshot is that users won’t need to acquire a network’s native token to pay gas fees.

The protocol's UNI token is up 2% in the past 24 hours, ahead of major digital assets like BTC, ETH, and BNB, all of which have lost value in that span.

Uniswap Labs is among the most influential companies working in the decentralized exchange (DEX) space. The firm’s move to develop a protocol to aggregate trade requests speaks to the increasing fragmentation of liquidity across DeFi.

As tokens are increasingly spread across chains and protocols, the need for a specialized third party, a “filler” in this case, to figure out the optimal trade execution route is becoming increasingly clear.

Observers noted the similarity between UniswapX and projects like CoW Swap, another aggregator which outsources trading to third parties that it calls “solvers.” Felix Leupold, the CTO at the company behind CoW Swap, told The Defiant that the user experiences of CoW Swap and UniswapX stand to be “very similar.”

Leopold contends that CoW Swap’s design still offers better pricing because it batches trades rather than processes them individually like UniswapX. Batching many different trade requests together provides better MEV resistance, he said.

The whitepaper on UniswapX did say that CoW Swap, DeFi protocols like MakerDAO, and aggregators like 1inch did provide “inspiration” for the new product.

There’s been increasing overlap between features announced by CoW Swap and Uniswap of late — the team behind CoW Swap also launched a “Hooks” product last week, after Uniswap announced plans to develop a similar functionality last month.

The blog post on UniswapX highlighted that, like the original Uniswap protocol, the aggregator includes a “fee switch,” which governance has the option to turn on. Governance consists of holders of Uniswap’s UNI token.

The protocol’s fee switch is a feature that will take a small commission on the exchange’s trading volume — many holders of UNI have expressed interest in turning on the fee switch and directing the fees to holders of the token.