I came across the WTF post about the uniswap-v4 community reading and learned about some of the new features of the latest version, v4. Welcome everyone to supplement and study together.
Uniswap v4 has the following features:
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Hooks and Custom Pools: v4 introduces "hooks," which are contracts that run at various points in the pool operation lifecycle. This allows developers to innovate on top of the Uniswap protocol's liquidity and security by creating custom AMM pools with hooks integrated into v4's smart contracts. Each pool can use its own hook contract, and hooks can be limited to specific permissions determined at pool creation.
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Improved Architecture and Gas Savings: v4 introduces a new "singleton" contract where all pools reside. This reduces costs and improves efficiency. Preliminary estimates suggest that v4 reduces gas costs for pool creation by 99%. Additionally, v4 introduces a new "flash accounting" system that only transfers assets on net balance instead of in and out of the pool at the end of each swap, making the system more efficient and providing additional gas savings for Uniswap v4.
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Dynamic Fees and Order Restrictions: v4 will allow for pools that support dynamic fees, adding on-chain order restrictions, or acting as Time-Weighted Average Market Makers (TWAMM) to distribute large orders. Pool creators can set fee tiers that make them most competitive or customize using dynamic fee hooks. v4 also restores support for native ETH, providing additional gas savings.
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Licensing and Governance: The code for Uniswap v4 will be released under the Business Source License 1.1, which limits the use of v4 source code in commercial or production environments for up to four years, after which it will permanently transition to the GPL license. Similar to v3, Uniswap governance and Uniswap Labs can make exceptions to the license.
Hooks Lifecycle as shown in the figure:#
When someone creates a pool on Uniswap v4, they can specify a hook contract. This hook contract implements custom logic that will be called during the pool's execution.
Uniswap v4 currently supports eight such hook callbacks:
- beforeInitialize/afterInitialize
- beforeModifyPosition/afterModifyPosition
- beforeSwap/afterSwap
- beforeDonate/afterDonate
The address of the hook contract determines which hook callbacks are executed. This creates a gas-efficient and expressive way to specify the desired callbacks and ensures that even upgradable hooks adhere to certain invariants. The minimum requirements for creating a working hook are minimal.
Improved Architecture and Gas Savings#
Uniswap v4 improves gas efficiency and developer experience by introducing new architecture and optimizations. Some of these optimizations include:
- Singleton Pattern:
Uniswap v4 uses the singleton pattern to reduce duplicated code and storage costs. The singleton pattern allows multiple contracts to share the same storage space, reducing storage costs. - Flash Accounting:
Flash accounting is an optimization technique that uses transient storage to record balance changes, reducing storage costs. In Uniswap v4, flash accounting is used to record balance changes for liquidity providers, improving gas efficiency. - Gas Optimization:
Uniswap v4 reduces gas costs by using less storage and fewer computations. For example, Uniswap v4 uses less storage to record balance changes for liquidity providers, reducing storage costs. Additionally, Uniswap v4 uses fewer computations to calculate transaction fees, reducing computational costs.
MEV-related#
Uniswap v4 introduces a new mechanism to internalize Miner Extractable Value (MEV) into the returns of liquidity providers. This mechanism is implemented through hooks, allowing developers to execute custom logic during the pool's execution. These hooks can be used to implement mechanisms for internalizing MEV, allowing liquidity providers to benefit from MEV. This is a new feature in Uniswap v4 that can help liquidity providers better manage their returns and provide them with better yields.
In Uniswap v4, the mechanism for internalizing MEV is implemented through hooks. Specifically, developers can use the beforeSwap and afterSwap hooks to implement this mechanism. In the beforeSwap hook, developers can check the current state of the transaction and decide whether to execute the swap. If the swap is executed, developers can perform some custom logic in the afterSwap hook, such as internalizing MEV into the returns of liquidity providers. To implement this mechanism, Uniswap v4 also introduces a new concept called Time-Weighted Average Automated Market Maker (TWAMM). TWAMM allows trades to be executed in batches over a period of time, reducing the impact on market prices. This mechanism can help liquidity providers better manage their returns and provide them with better yields. In summary, Uniswap v4 provides a mechanism for liquidity providers to internalize MEV by using hooks and TWAMM, helping them better manage their returns and provide them with better yields.
Dynamic Fees and Order Restrictions#
Uniswap v4 introduces dynamic fees and order restrictions, which can help liquidity providers better manage their returns and provide them with better yields. Dynamic fees refer to transaction fees that can be adjusted based on market demand. In Uniswap v4, transaction fees can be either static or dynamic. If the transaction fees are static, they will remain unchanged. If the transaction fees are dynamic, they will be adjusted based on market demand. This mechanism can help liquidity providers better manage their returns and provide them with better yields. Order restrictions refer to the ability to trade within a certain price range. In Uniswap v4, order restrictions can help liquidity providers better manage their returns and provide them with better yields. Order restrictions can prevent traders from executing trades in situations where there is significant price volatility, protecting the returns of liquidity providers.
Uniswap v4 introduces dynamic fees and order restrictions, which can help liquidity providers better manage their returns and provide them with better yields. Dynamic fees can be adjusted based on market demand, while order restrictions can prevent traders from executing trades in situations of significant price volatility, protecting the returns of liquidity providers.
In conclusion, Uniswap v4 offers advanced customization, cost efficiency, and innovation, allowing anyone to make these trade-offs decisions by introducing "hooks" and enabling fast and expressive AMM innovation within a powerful ecosystem.
References:
https://blog.uniswap.org/uniswap-v4
https://github.com/Uniswap/v4-core/blob/main/whitepaper-v4-draft.pdf