📘 UNISWAP V2

1. 🎯 Motivation: Why V2?

V1 was genius, but quirky:

• Only ETH ↔ Token pairs → all token-to-token trades needed two hops (DAI→ETH, then ETH→USDC).
• No reliable on-chain price oracles → easy to manipulate in a single block.
• Limited composability for other DeFi protocols.
• LP tokens were primitive, and liquidity efficiency was weak.

The mission of V2 was simple: make swaps more direct, composable, and secure while keeping the elegance of AMMs.

2. 🏗️ Key Architectural Changes

🔹 Direct ERC20 ↔ ERC20 Pairs

• V2 allows any ERC20 token to be paired directly with any other ERC20.
• Example: Instead of DAI→ETH→USDC, you get DAI↔USDC in one hop.
• Fees drop back to 0.3% (single hop) instead of 0.6%, and slippage is reduced.
• ETH is no longer the “forced middleman.”

💡 This was the single biggest fix to V1 inefficiency.

🔹 Price Oracles (Time-Weighted Average Price, TWAP)