Uniswap has announced the release of the Uniswap v4 code draft, so that v4 can be publicly built. Uniswap v4 allows developers to customize liquidity pools by introducing “hooks,” such as dynamically adjusting fees or creating new order types. In addition, the v4 pool will exist in a single contract, reducing the cost of creating mining pools by 99%. At the same time, the new “flash accounting” system will significantly reduce the cost of routing across multiple mining pools.
Uniswap v4 appears to be a combination of Uni v3’s concentrated liquidity and Balancer’s features (all tokens stored in the same contract to reduce gas, smart pool functionality allowing tokens to earn yield elsewhere when idle…).
Uniswap V4 is an overall optimization for large orders and market makers/high-frequency trading. Two particularly exciting features are: 1. Limit orders, which although are still essentially takers, are executed at a certain tick price. The native solution based on ticks is clearly much better than the limit orders provided by other DEX aggregators triggered by external bots. 2. Dynamic fees based on volatility, which compensates LPs for losses incurred without compensation. When there is high volatility, LPs lose money, and adjusting fees is a good strategy to subsidize the losses.
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- Quick Overview of Uniswap V4: Introducing Hook Plugin to Improve Capital Efficiency, Enhancing Architecture, and Saving Gas