Uniswap Unveils New Security Feature: Will It Boost UNI Demand?
January 18 2024 - 10:00AM
NEWSBTC
Uniswap Labs, the developer of Uniswap–a decentralized exchange,
has introduced a new security feature called Permit2. Taking to X
on January 18, the DEX developer said this update addresses
the “infinite token allowances” vulnerability that hackers can
exploit. This flaw risked user funds, and the new feature is meant
to resolve this concern. Uniswap Sealing Infinite Token Allowance
Risks In crypto, especially among decentralized finance (DeFi)
protocols, the “token allowance” is permission initiated by the
user granting smart contracts access to tokens. From there, assets
can be moved. With this permission, it becomes possible for users
to interact with dapps, chiefly protocols that utilize user funds.
Some of these dapps include, for instance, decentralized exchanges
like Uniswap or lending platforms like Aave or Maker. Related
Reading: Bitcoin Sees Massive Sell-Off From Miners, As Price Holds
Steady While useful, “token allowance” can be exploited by hackers
via “infinite token allowance,” where hackers can infinitely access
and illegally withdraw funds from wallets, draining them as a
result. Once a wallet has been compromised, it can be drained
without the user’s knowledge since the compromised code already
permits the hacker to move funds. Aware of this risk, Uniswap Labs
is introducing the open-source Permit2 as a solution. The tool, the
DEX developer says, will give users more protection and, more
importantly, control over digital assets. A key feature of Permit2
is that users can set time limits on token approvals. Third parties
can only access funds within a specific period in this
arrangement. Additionally, the tool introduces a reusable
token approval for simplicity. With this feature, end users don’t
have to repeatedly grant access to their funds for each
transaction. On the gas-saving fronts, Uniswap Labs say Permit2
also utilizes signature-based approvals and transfers. This means
the tool can reduce gas fees when users transfer tokens. Uniswap
Building, UNI Remains Under Pressure This enhancement precedes the
upcoming release of Uniswap v4, which introduces Hooks. This new
feature provides developers with more flexibility and control over
their applications. Related Reading: Why Is Bitcoin Price Trading
Sideways? 3 Key Factors Analysts say the launch of Uniswap v4 and
Uniswap Labs’ continuous enhancement to improve security might
cement the DEX’s position. According to DeFiLlama data, Uniswap has
managed over $4.4 billion worth of assets. Even so, UNI prices
continue to struggle. Looking at the daily chart, UNI has
resistance at around $8.1 and is currently down roughly 20% from
December highs. Sharp losses below $6 might trigger a sell-off,
forcing the token towards $4.5 or lower. Feature image from
Canva, chart from TradingView
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