Decentralized exchange Uniswap has unveiled Continuous Clearing Auctions (CCA) meant to facilitate and streamline token offerings on its exchange platform. The DeFi exchange’s new protocol aims to solve challenges and shortcomings in traditional liquidity methods while promoting transparency to new token launches.
Uniswap announced that the new protocol will roll out a decentralized platform for developers to bootstrap liquidity on Uniswap v4. The protocol will also help teams determine the market price for new and existing low-liquidity tokens.
Uniswap highlighted that the tool is among the numerous tools that its developers are working on to provide deepened liquidity for token launches on the Uniswap platform.
Uniswap partners with Aztec to unveil CCA protocol
Uniswap’s official announcement detailed that its developers engineered the protocol in conjunction with Aztec. Aztec is the first project to capitalize on CCA during its launch. The project launched on November 13th as a privacy-native Layer 2 on Ethereum using Uniswap’s CCA protocol and its set of specialized smart contracts.
Zac Williamson, Co-Founder of Aztec Network, commented on the project’s launch on CCA, stating that the protocol heavily challenges whales and insiders and favours community members. He explained that the protocol is set to disrupt the industry by reversing the monopolized process of launching projects. The official mentioned that the AZTEC token will be 100% community-owned upon token unlock.
Uniswap’s announcement noted that liquidity issues during project launches often create information gaps and sometimes grant privileges to a few players, leaving the markets thin and unstable. The exchange added that CCA was designed to counter these challenges and enhance the launch of DeFi projects. According to Uniswap, CCA will conduct its auction on-chain, leveraging blockchain technology to offer pricing, bidding, and transaction settlement for transparency and accountability.
CCA goes live, promoting a fair token launch environment for community members
The decentralized platform also highlighted that CCA will manage the project launch fairly and gradually, with price delivery over time, through a continuous clearing process that distributes the token supply. The process incentivizes bidding early, limits volatility, but discourages sniping. Uniswap explains that these conditions will help the market converge to a fair value for all participants.
The platform will also seed liquidity automatically from Uniswap v4. Proceeds will autonomously create a Uniswap v4 pool at the discovered price, therefore deepening liquidity.
The project team members will need to define the number of tokens to sell, a starting price, and the duration of the auction. The protocol also includes an optional, privacy-enhanced, zero-knowledge proof-based Know Your Customer (KYC) implementation, known as the KYC ZK Passport module, which enables private and verifiable participation.
CCA will then allow users to place bids, specifying a maximum price and total spend. Once users place their bids, they can only withdraw them if they are out of range, but they can place as many bids as they want during the auction. Each bid spans blocks, using the same maximum price for each split. A bid will only fill if the block’s clearing price is at or below the bidder’s limit.
The protocol sets a single market-clearing price at the end of each block, which is the highest price where all tokens spread in that block can be sold. The system will fill higher bids first and then finalize with bids at the clearing price. Uniswap noted that bids that fill in that block will pay a standard price. As more bids flow into the system and the supply per block remains preset, the clearing prices will remain the same or trend upward.
The news comes after Uniswap’s native token, UNI, spiked 70% in a week following the protocol’s announcement of governance upgrades and a proposal to burn 100 million UNI tokens. Cryptopolitan also reported that the decentralized exchange had the highest amount of new wallets created in three years.
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Source: https://www.cryptopolitan.com/uniswap-debuts-continuous-clearing-auctions/
