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PancakeSwap's vision for its version 4 extends the concept of a decentralised exchange by aiming to enhance flexibility and functionality within the Automated Market Maker sector. This goal is pursued through collaboration between the project's developers and the broader DeFi community. Consistent with this approach, the PancakeSwap v4 code will be available under an open-source licence.

The initiative addresses several known issues with existing AMMs, such as limited pricing models for different assets, inadequate execution functions compared to centralised exchanges, impermanent loss affecting liquidity providers, and high transaction fees on the blockchain for users.

PancakeSwap v4 is designed to improve the user experience of DEXs by integrating with new and existing features like veCAKE, aiming to become a highly functional DeFi platform.

Key Innovations in PancakeSwap v4:

• Hooks for Enhanced Functionality and Fee Management: Hooks are separate contracts that can be integrated to add functionalities to swaps and liquidity pools, allowing for innovations such as dynamic fees, custom order types and liquidity management tools. Fees generated can be allocated flexibly to creators or community stakeholders.
• Support for Various Pool Types and Incentives for Liquidity: At its launch, PancakeSwap v4 will support different pool types, such as CLAMM and Liquidity Book, providing the ability to adopt or develop new AMM designs to better accommodate different asset types.some text
  • Liquidity Book AMM: Utilises a constant sum formula within designated price bins to minimise price impact and impermanent loss for liquidity providers. It facilitates efficient liquidity adjustments and supports limit orders, promoting flexibility in liquidity provisioning.
  • Donate Feature: Enables stakeholders to offer incentives to liquidity providers within certain price ranges, supporting the liquidity ecosystem.
• Singleton and Flash Accounting for Improved Gas Efficiency: V4 introduces a single contract for all pools, significantly reducing deployment costs. Flash Accounting, benefiting from "Transient Storage" enabled by EIP-1153, optimises transaction processing and reduces gas usage by settling balances in batches.

Open Source Commitment:

PancakeSwap v4 emphasises open-source principles to contribute to the DeFi industry's growth. By releasing the v4 code as open-source, it encourages developer innovation and collaboration. The Affiliate initiative invites DeFi protocols that fork PancakeSwap v4 to foster broader adoption and community involvement.

Developer Support programme:

A $500,000 Developer programme has been established to stimulate creativity and collaboration among developers. This includes various initiatives such as Growth Campaigns, Hackathons, a Developer Ambassador programme and a CAKE Emissions Grants programme, designed to support developers creating enhancements for PancakeSwap v4.

Future Developments:

The launch of PancakeSwap v4 is planned for the third quarter of the year on Ethereum and BNB Chain, with intentions to extend to more blockchains. 

PancakeSwap cross-chain usage;

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By zooming in one step further we can see the exact volume used per chain, it is noteworthy that in recent days there has been an uptick in Base activity:

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Disclaimer: This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.

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