Skip to main contentWhy Uniswap V3?
A common ERC404 use-case is to utilize Uniswap as both an exchange and mint platform. Common ERC721 projects
have long faced issues with price discovery and liquidity, some examples of which are as follows:
- Mint prices are set too low, forcing slow price discovery on illiquid secondary markets
- Mint prices are too high killing projects along with all price discovery
- Bonding curves tend to be too constraining given the above, often resulting projects not minting out
- Illiquid markets tend to prevent active or engaging speculation
- Botting / sniping can create unfair releases requiring large technical overhead to remediate
One of the main draws of ERC404’s flexibility has demonstrably been it’s ability to easily integrate with
mature DeFi protocols. Utilizing Uniswap V3 as a mint platform and exchange allows projects to see the full
spectrum of price discovery, while supporting deep liquidity and higher, consistent royalty earnings (while charging
users lower royalty fees). Specifically, Uniswap V3 as a bonding curve, paired with native fractionalization
allows projects to launch more flexibly and in a way that removes traditional mint constraints.
Approaching a Uniswap V3 Launch
It’s important to consider Uniswap V3 as a novel mint mechanism that requires some degree of planning. You’ll want to
define a curve along which initial supply is pooled, moving up to a full range LP. An example launch plan for a 10k collection
could be as follows:
- 2500 tokens provided in a range from 0.01 - 0.02 eth
- 2500 tokens provided in a range from 0.02 - 0.05 eth
- 5000 tokens provided in a full range of 0.05+ eth
It’s critical to note that this final pool should have an infinite or very high maximum price, effectively
serving as a bounded V2 pool; this ensures that the collection has no price “ceiling” whereas the bottom pool
ensures a hard, absolute floor price. 