The latest improvements to Uniswap, the largest decentralized crypto exchange by volume, include the V4 update, which will introduce “hooks” — smart contracts that interact and build on top of custom pools — and architectural efficiencies that should significantly reduce gas costs. With these advancements under way, one might ponder the future of Uniswap and a key question arises: Would Uniswap be better off on its own appchain?
In a recent Empire podcast, Blockworks research analyst David Rodriguez argues that the next obvious step for Uniswap is to operate its own appchain. Owning and operating “the entire stack,” as opposed to running on Ethereum, provides important advantages such as potentially monetizing every layer of the stack and having full customization of the application.
Rodriguez refers to the “singleton contract” under V4, which presents an example of the difficulties in operating on the Ethereum network. However, moving to Uniswap’s own appchain could remove the need for political lobbying in terms of prioritizing the necessary op code for Ethereum, as it could build its own full stack and operate independently.
On the other hand, Blockworks research analyst Ren Yu Kong disagrees, arguing that V4 signifies that Uniswap may not move to an appchain model. The major reason for a DeFi application to move to the appchain model would be for “value capture” through internalization of MEV (value from network activities) or turning on a fee switch. With the “hook” smart contract improvement introduced in V4 allowing for some internalization of MEV, Kong believes that Uniswap may not be concerned about value capture and thus may not see the need for an appchain.
In conclusion, while the idea of Uniswap having its own appchain brings several benefits in terms of customization and potential monetization, it may not be a necessary step for achieving value capture. The debate over Uniswap’s potential move to an appchain versus remaining on Ethereum will likely continue as further developments unfold in the future, shaping the ways in which the popular DeFi tool is utilized and advanced.
Source: Blockworks
