As is well known, the emergence of L2 solutions allows smaller independent blockchains to leverage the deep liquidity of the Ethereum mainnet, and for DeFi, L2 also provides a way to optimize the user experience - this is the direction that the largest DEX Uniswap is currently betting on.
Uniswap Launches Native L2
On October 10, Uniswap announced its plan to build an L2 on Ethereum, using the OP Stack from Optimism, called Unichain, aimed at addressing the current limitations of DeFi, namely cost, speed and interoperability, to unlock new markets and use cases with faster, cheaper transactions and better cross-chain liquidity.
Hayden Adams, CEO of Uniswap Labs, believes that "after years of building and scaling DeFi products, we've seen where blockchains need improvement and the conditions required to continue pushing the Ethereum roadmap forward. Unichain will provide the speed and cost savings of L2s, better cross-chain access to liquidity, and achieve greater decentralization."
Features and Advantages of Unichain
Among the many L2 solutions, Unichain aims to improve competitiveness in the three key areas of cost, speed and interoperability.
According to official estimates, after the launch of Unichain, transaction costs will be 95% cheaper than Ethereum, and costs will decrease over time. While cheap transaction costs are not new to Ethereum L2s, Uniswap claims it will achieve this low cost while maintaining decentralization, which most other L2s have not yet achieved.
Uniswap states that it will achieve this goal through the upcoming decentralized verification network, allowing full nodes to help verify blocks by staking UNI, further decentralizing the blockchain. UNI stakers will act as a second layer of security for the Unichain platform, strengthening the network's security and making it less vulnerable to attacks and manipulation. The addition of new validators will also increase the network's resilience, ensuring it can support larger transaction demands without compromising security.
At the same time, Unichain will provide users with near-instant transactions, with a block time of 1 second, which will eventually be reduced to 0.2-0.25 seconds. In comparison, Ethereum has a block time of 12 seconds, and most L2s have a block time of 2 seconds. This speed not only improves the user experience, but also plays a crucial role in improving market efficiency.
The shorter block time of Unichain will reduce the value loss caused by MEV (a form of attack that allows block builders to front-run normal users' transactions), as the fast transaction time on Unichain reduces the opportunities for arbitrage and MEV, allowing users to get better value from their transactions.
Furthermore, Unichain significantly reduces transaction time by leveraging the block builder developed in collaboration with the Ethereum team Flashbots. The core of the block builder is the Trusted Execution Environment (TEE), which can improve the transparency and speed of transaction ordering and prevent transaction failures.
Unichain promises seamless cross-chain swap experience for Superchain (the multi-chain network of Optimistic rollups) transactions by leveraging Optimism's native interoperability. This is crucial for the future of DeFi, as users and protocols increasingly demand the ability to access different blockchains smoothly and conveniently. Currently, the L2 Optimistic rollups include Optimism mainnet, Base network, Blast, Celo, etc., all of which are potential future candidates for seamless cross-chain interoperability.
For chains outside of Superchain, Unichain is working to improve the communication methods between different blockchains. Through initiatives like ERC-7683, the cross-chain transaction execution standard developed by Uniswap and Across protocol, aimed at enhancing cross-chain transactions, the goal is to make transactions between any chains effortless.
Unichain adopts a modular design, meaning new features can be added to make it more decentralized and user-friendly. And it is open-source, so other chains can join and use its technology. Uniswap Labs will also continue to contribute to the expansion of Ethereum, ensuring DeFi provides a better experience for everyone.
How Does Vitalik View Unichain?
Currently, Vitalik has not commented on Unichain, but many community members are curious about Ethereum co-founder Vitalik Buterin's attitude towards the launch of Unichain. So, someone X searched for clues and finally dug up an old post by Vitalik from September 2022, where he commented on some of Uniswap's ideas at the time.
Vitalik believes that Uniswap's value proposition is the convenience of trading, so deploying a rollup on a DEX doesn't make sense. He also stated that if Uniswap deployed on every rollup, it would get better development.
Of course, this can only represent Vitalik's past thoughts, and based on his comments on L2s last month, he believes that the low transaction fees of L2s are an important milestone for the entire Ethereum ecosystem, as it solves the main challenge of mainstream adoption.
In fact, Uniswap has been continuously expanding since its launch and has been deployed on multiple protocols, including Ethereum, Base and Binance Smart Chain, but ultimately chose to launch its native L2 - Unichain. It is worth noting that the launch of Ethereum L2 solutions has become a common phenomenon in the crypto field. Most of these projects focus on addressing Ethereum's scalability challenges.
L2 Beat data shows that there are currently 105 L2 protocols trying to solve Ethereum's scalability issues. Currently, among these L2 protocols, Arbitrum, Base and Optimism's OP Mainnet rank the top three in TVL, at $13 billion, $7.2 billion and $5.8 billion respectively.
At the same time, Vitalik is also seeking more ways to improve Ethereum's functionality. He has recently shared his new vision for the ecosystem, the core of which is to enhance Ethereum's alignment. [Note: Typically, the concept of alignment includes value alignment (e.g., open-source, minimizing centralization, supporting public goods), technical alignment (e.g., cooperating with standards within the ecosystem scope) and economic alignment (e.g., using ETH as the token where possible).]
In the Ethereum ecosystem, balance is a key governance challenge, integrating decentralization and collaboration. The advantage of this ecosystem is that there are a wide range of individuals and organizations (client teams, researchers, L2 network teams, app developers, local community groups) all working towards their own visions of what Ethereum could become. The main challenge is to ensure that all projects are building a unified Ethereum ecosystem, rather than 138 incompatible fiefdoms.
How Will Unichain Impact Ethereum?
Since Uniswap generates the highest revenue for Ethereum, it is one of the largest user groups on the Ethereum L1 chain. Some crypto community commentators believe that Uniswap's launch of a native L2 chain may impact the Ethereum mainnet. Once Uniswap moves to its own chain, it will be able to capture transaction fees and MEV fees. Although the exact business share that will shift from Ethereum is yet to be observed, these two revenue sources are certainly significant.
However, this may lead to a decline in network activity related to the Ethereum L1, which in turn will affect the ETH burn rate. The increasing migration of protocols from Ethereum's L1 may further weaken the narrative of ETH as a "hyper-deflationary asset" (by default after the activation of EIP-1559).
Catalysts for Ethereum's Growth: Innovation, Users, Big Tech, dApps
Although the launch of Unichain has raised doubts about the Ethereum narrative, community supporters argue that Ethereum still has strong catalysts, and Ethereum as a technology and ecosystem will only grow over time.
First, the rise of staking infrastructure like Eigenlayer is bringing a wealth of innovation to Ethereum technology: data availability layers, on-chain oracles, trustless bridges, and more. The next generation of L2 solutions will push Ethereum's throughput beyond 100,000 TPS and achieve seamless interoperability with ecosystems beyond the EVM.
Secondly, the participation of top-tier asset management companies (Blackrock) and Web2 tech giants (Sony, Samsung) in Ethereum-based solutions will only increase over time.
Finally, L2 is actually continuously bringing retail clients to Ethereum, especially in cases where on-chain transaction fees are lower. Mainstream dApps are also doing so, such as Polymarket or Farcaster, which have finally found product-market fit and meet the real-world needs of internet users.
Summary
Although the launch of Unichain may have some impact on the transaction fees of Ethereum L1, to a certain extent challenging some of Ethereum's fundamental roles. Through the redirection of fees and network activity, Uniswap's initiatives may trigger a broader migration trend, reshaping the competitive landscape of the cryptocurrency market, encouraging Ethereum and other blockchains to innovate and remain competitive.
At the same time, as the largest decentralized exchange by trading volume, Unichain will expand the DeFi and Ethereum ecosystem by optimizing transaction speed, reducing costs and improving the user experience, increasing user participation in DeFi, promoting mass adoption, and benefiting multiple blockchains including Ethereum.
Fundamentally, L2 solutions like Unichain are not directly competing with Ethereum, but rather creating more suitable scenarios for mass adoption, exploring Ethereum's true growth points, namely technological innovation, user growth, widespread participation of tech giants, and the explosion of Dapp applications.
