- PancakeSwap, a popular DEX, upgraded to its Version 3 on BNB and Ethereum chains through a fork of Uniswap V3.
- Blockchain developers raise concerns of increased vulnerability to attacks, reminiscent of OHM forks.
- UNI is currently rallying, it remains to be seen whether the gains are sustainable in the long-term.
Decentralized exchanges have long practiced “forking” of protocols for easy access and “copy-paste” code to power DEXes in the short-term. PancakeSwap’s Version 3 launch on the BNB and Ethereum chain was powered by a fork of Uniswap V3.
The move garnered criticism from blockchain developers in the community and raised the issue of “security” of DEXs, since duplication exposes multiple platforms to the same threat.
Also read: Ethereum Improvement Proposal EIP-4844 turns experts bullish, will ETH price rally?
PancakeSwap forked Uniswap V3 for Version 3 launch on BNB and Ethereum chain
PancakeSwap, one of the most popular DEXs in the DeFi ecosystem forked Uniswap’s V3 for its Version 3 launch. PancakeSwap V3 was rolled out on BNB and Ethereum chain, and gained $128.86 million in Total Value Locked (TVL) since its launch.
1/14 GM ev3ryone! The anticipated #PancakeSwapv3 is now LIVE on both BNB Chain and Ethereum!
— PancakeSwapEv3ryone's Favourite D3X (@PancakeSwap) April 3, 2023
Upgrade offers:
Lowest fees in the industry
Increased fee earnings for liquidity providers
️New tools for seamless user experience
Read more : https://t.co/l7GQVxqVC3 pic.twitter.com/5G9TnFzxOb
PancakeSwap V3 TVL
PancakeSwap’s forking of the largest DeFi DEX Uniswap reminds experts of the DeFi summer of 2022 and OHM forks, which ended up in rug pulls for several market participants.
There is a good and bad side of PancakeSwap forking UNI’s DEX. Uniswap has over 26,600 daily active users as of January 2023. The number of active users and the DEXs’ functionality could bring benefits to CAKE’s ecosystem.
However, the dark side of “copy-paste” DEXs was the OHM forks of 2022. A copy-paste of the code without essential due diligence could result in security threats and loopholes that malicious actors could exploit.
What were the OHM forks of the past
OHM forks are considered catalysts of DeFi 2.0 and the inspiration for metaverse projects. In 2021-22, forks of Olympus DAO’s codebase were used to obtain the liquidity of the protocol, instead of relying on DeFi’s practice of “yield farming.”
Yield farming is the practice of locking up tokens for a fixed period of time and earning a yield through staking. Olympus DAO’s success made it the focal point of several forked projects that sprung up through the summer.
Some of the most popular OHM forks of the time were Wonderland (TIME), Klima DAO (KLIMA), Rome DAO (ROME), Snowbank (SB), Hector DAO (HEC), Spartacus (SPA), Invictus (IN) and TaiChi DAO (TAC).
Wonderland (TIME), a fork of OHM’s contract, was launched in the Avalanche ecosystem. The project’s contract was sniped at launch, raising questions on whether anything was “inherently wrong” with Wonderland. A group of insiders/ DeFi friends funded the launch and sniped the contract after being part of the core group of TIME.
Several users were rug pulled (lost their funds) in a similar manner, when they picked projects based on lucrative Annual Percentage Yields (APY).
OHM forks that suffered rug pull
Prior to OHM forks, 2020 was filled with the launch of DeFi food-themed protocols like SushiSwap, BurgerSwap, Yam Finance, Bakery Swap, among others. Influencers and analysts warned crypto traders farming for yields on the BNB chain as Bakery Swap resulted in losses for several retail market participants.
1/Reminder to be careful when farming on Binance Smart Chain. As I said, it's managed by only one team & is not decentralized. Built on #BSC, #BakerySwap caused huge losses for many retail investors <12h after mining began, which led to protests against BSC in China & elsewhere. https://t.co/BVvXeANN2s
— OKX Intern (@okx_intern) September 15, 2020
Binance CEO CZ commented on the trend in DeFi in a recent tweet, addressing Uniswap’s fork by PancakeSwap’s team.
We need more DEXs. Pancake has most of the users. Uni has most of the TVL. That's still "too centralized"... (I know, imagine that coming from me. ) Need more options.
— CZ Binance (@cz_binance) April 5, 2023
PancakeSwap v3 Now Live on BNB Chain, Ethereum https://t.co/tARoeCCr4m
Is PancakeSwap’s V3 launch the start of a new trend?
DeFi’s food-themed projects in 2020, OHM forks of 2021-22 and now Uniswap V3 forks is likely the new trend in Decentralized Finance. CAKE price witnessed a correction and started its recovery soon after. The launch of PancakeSwap V3 turned out to be a “non-event” for CAKE holders, unlike the V2 launch, which was a “sell-the-news.”
Uniswap’s UNI token continued rallying, yielding nearly 5% gains for holders since April 5, as the protocol got forked by PancakeSwap. It remains to be seen how sustainable UNI’s gains are in the long-term.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Bitcoin rises 4% amid long liquidations, and short-term holders realized share
Bitcoin climbed above $63,000 on Friday after Mt Gox pushed its repayment plans to 2025, easing tension among investors. Meanwhile, CryptoQuant data reveals that Bitcoin long liquidations hit $290 million on Thursday, the highest level since 2022.
Arbitrum, EigenLayer, Axie Infinity lead over $214 million worth of token unlocks this week
Token Unlocks data on Friday indicates that the crypto market is poised for another round of supply hikes this week, with EigenLayer, Arbitrum, Axie Infinity and Starknet set to release a combined $214 million worth of their tokens into circulation.
XRP holds steady above $0.53 as Ripple confirms cross-appeal, Bitnomial sues SEC
Ripple holds steady above key support at $0.5300. The altcoin gains as the payment remittance firm confirms the filing of a cross-appeal in the Ripple lawsuit with the Securities & Exchange Commission. Ripple is gearing up to introduce new features for its custody solutions for institutional investors.
Ethereum Price Forecast: ETH reclaims $2,395 support but risks inflationary pressure with Unichain's launch
Ethereum (ETH) reclaimed the $2,395 support level on Friday and is attempting a move toward the $2,490 resistance. The top altcoin could face inflationary pressure in the coming months when Uniswap's Unichain goes live due to the decentralized finance protocol's large contribution to Ethereum revenue and daily burnt ETH.
Bitcoin Weekly Forecast: Will BTC decline further?
Bitcoin’s (BTC) price fell over 6% at some point this week until Thursday, extending losses for a second consecutive week, as it faced rejection from a key resistance barrier.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.