QuickSwap is a decentralized exchange native to Polygon that enables permissionless trading and liquidity provision (to earn trading fees). QuickSwap V3 introduces concentrated liquidity to improve capital efficiency for LPs.
QuickSwap V3 is an automated market maker (AMM) that introduces the concentrated liquidity AMM model and is forked from Uniswap V3 on Polygon. Concentrated liquidity is a new AMM model where liquidity is allocated within a custom price range. Previously in QuickSwap, liquidity was distributed between 0 and infinity, uniformly along the price curve. V3 allows liquidity providers (LPs) to concentrate their capital on smaller price intervals or ticks. This offers traders deeper liquidity and allows LPs to earn more with less capital required. However, this also increases impermanent loss as rising and falling asset prices can result in the position's liquidity being out of range (e.g. position is fully one asset) and no longer earning fees.
Instead of the 0.3% trading fee that QuickSwap V2 charges, V3 offers dynamic fees that adjust based on volatility. The rates for V3 are variable and expected to average between 0.1%-0.15%. When traders swap between stables, the fee will be lower. but swaps between volatile assets will be higher to decrease the risk of impermanent loss for LPs. The new fee split is as folllows: 90% will go to LPs, 6.8% to the Dragon's Lair (QUICK stakers), 1.7% to the QuickSwap Foundation, and 1.5% to the V3 developers.
V3 offers significant upgrades to the time-weighted average price (TWAP) oracles in V2. Oracles in V2 worked by storing cumulative sums of token pairs. This allowed the price sums to be checked only once at the beginning and once at the end of a period. V3 removes the need to track previous values as it stores an array of cumulative sums instead of just one. This make it possible to calculate TWAP within the past on a single chain call.