April 15, 2024

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PancakeSwap Decentralized Exchange Unveils Version 4 to Make Trading More Efficient

2 min read
  • PancakeSwap’s version 4 will be released later this year with four key features: hooks, custom pool types, singleton and flash accounting, aiming to make on-chain trading cheaper and more efficient for users.

  • The new version will be available on the Ethereum and BNB Chain networks in the third quarter, offering improved pricing of listed assets, reduced gas consumption and lower deployment costs.

Decentralized exchange (DEX) PancakeSwap will release version 4 (v4) later this year, adding four features to its automated market maker (AMM) to make on-chain trading cheaper and more efficient for users, developers told CoinDesk in a Telegram chat today.

“PancakeSwap v4 code will be released under an open-source license,” head developer Chef Mochi said. “It addresses the shortcomings of current AMMs, including inflexibility in pricing models for all assets, lack of CEX-level execution functions, impermanent loss for liquidity providers, and pricey on-chain gas fees for users.”

A CEX is a centralized exchange such as Coinbase (COIN) or Binance.

The four new features are:

  • Hooks, or externally deployed contracts, that let developers add customizable add-ons. The add-ons allow for changing the type of fees charged for a trade and the type of trading order (such as limit or market orders). Hook creators can either keep fees for themselves or distribute them to stakeholders.

  • Custom pool types offer several types of liquidity pools to users and aim to provide better pricing of listed assets. That would help prevent a token’s price from fluctuating wildly during times of demand or selling, ensuring it is more appropriately priced at times of market stress.

  • Singleton merges all pools into a single contract to reduce the deployment cost by 99%. The gas cost, or the fee paid for each blockchain transfer, is further reduced for swaps because there is no need to transfer tokens between separate contracts.

  • Flash accounting, which also reduces gas consumption, settles a bunch of transactions collectively. Gas fees tend to surge during times of market volatility, becoming expensive in a way that could limit a user’s ability to conduct a trade.

V4 will initially be available on the Ethereum and BNB Chain networks in the third quarter. The DEX holds $2.4 billion worth of tokens locked in liquidity pools and other services and processed $1.7 billion in trading volumes in the past 24 hours, DefiLlama data shows.

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