The goal of such an implementation is faster transaction speeds and significantly smaller gas prices. This in turn will act as an incentive to trade more.
For the Uniswap trader, the fee of trading on Uniswap is the Uniswap fee + the gas. This can hinder a lot of traders. For example if a trader wants to trade 100 DAI for X token, and wait until said token raises in price 10% to sell it back to DAI, depending on the gas price, that trader might actually lose money, even under the conditions of 10% gain of the token.
One of the biggest centralized exchanges right now, in terms of volume, Binance, has a very small transaction fee compared to other centralized exchanges, which is the main reason, in my opinion, why it managed to raise to such popularity.
If Uniswap manages to create a sidechain for itself (or another solution to lower gas prices, thus lower total fee that the trader incurs), it could be the launching pad to even greater highs than previously imagined.
One popular Ethereum game is currently developing and testing a Ethereum sidechain made specifically for it (AXS / Ronin sidechain).
How feasible would this be? I encourage anyone to pitch in their opinion on this. Thank you.
Reducing the gas price, that sounds good to any trader’s ear. Being able to say that the Uniswap platform is cheaper to use then Binance is a game changer. But is it truly sustainable in the long run?
Reducing trading fees must have been their priority since they/we are eating up ~20% of the eth network . I’d be surprised if the great dev team at Uniswap isn’t already working on a L2 solution
Would be nice to hear an answer from them
Thank you for your answer. I was not aware that sidechains are inherently centralized. The main reason I brought this up was to get a few knowledgeable people’s perspective. And also in case there might be other possible solutions to lower the gas cost of transactions.
I do agree that it is not worth it to sacrifice proper decentralization, even for lower gas prices. Maybe the problem will solve “itself” in 2021 with the coming of ETH shards and Uniswap V3.
ye they are centralized because on a side chain you always have some party you need to trust to process transaction on that side chain and submit results to main chain. There are ways to minimize centralization but it is always there.
TBH sidechains are not terrible idea. Maybe people would like to swap with lower fee some smaller stack and they wouldn’t mind that it is partly centralized.
. I’d be surprised if the great dev team at Uniswap isn’t already working on a L2 solution 