On March 15, PancakeSwap, a leading decentralized exchange, announced the latest update to its platform by releasing the fourth version of its codebase and whitepaper. This new version promises significant improvements, including customized liquidity pools and flash accounting, with the aim of reducing gas costs for users and preventing temporary losses for liquidity providers (LPs).

The 3rd largest decentralized crypto exchange

With over $2.3 billion in assets spread across nine different networks, PancakeSwap is currently known as the third largest decentralized crypto exchange. This status is underlined by data from the blockchain analysis platform DefiLlama. The announced improvements will launch in Q3 2024 on both the Ethereum and BNB networks.

The new version of the platform will integrate innovative hooks. These are customizable add-ons that can be used by independent developers to add additional functionality to specific liquidity pools, such as dynamic fees, custom oracles, and active liquidity management modules.

Support for liquidity book pools

A notable innovation within the update is the support for liquidity book pools, a move away from traditional pools that follow the X*Y = K formula, to pools that use the formula X + Y = K. According to PancakeSwap, this new pool type ensures that liquidity providers do not suffer from impermanent loss and that traders do not experience price impact during transactions.

To further reduce gas costs, adjustments have also been made, such as the transition to a ‘singleton’ model where all pools are brought together in one contract. This would significantly reduce the cost of ‘multi-hop’ transactions, which require multiple swaps. In addition, the v4 protocol optimizes the accounting process through ‘flash accounting’, leading to a further reduction in gas costs.

Open source license for new code

The new code has been released under an open source license, allowing developers interested in adopting the code to sign up to receive official recognition from the team as “affiliates.” Additionally, a $500,000 developer program has been launched to support independent developers in creating hooks for the fourth version of PancakeSwap.

These developments come amid a growing struggle among decentralized exchanges to implement new features to capture greater market share. For example, Uniswap announced the launch of a web extension wallet on February 27 and PancakeSwap introduced a ‘gauges’ voting feature for CAKE token holders in November 2023.

Source: https://newsbit.nl/pancakeswap-introduceert-baanbrekende-versie-4-van-zijn-platform/

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