Uniswap Labs, the leader of the largest decentralised exchange, on Friday, announced the latest and most flexible version of its defi protocol – the Uniswap v4.
In what its Founder and CEO Hayden Adams hailed as a “new era of DeFi”, launch of v4 comes after it announced in Nov last year the largest bug bounty of $15.5M in history – as an incentive to find vulnerabilities in Uniswap v4 core before its final launch on this Jan 31. Apart from the bounty, extensive reviews including Nine audit reports on core and periphery contracts, $2.35M security competition have been made for v4 before it went live on Friday. As of now, Uniswap v4 is being made live on Ethereum, Polygon, Arbitrum, OP Mainnet, Base, BNB Chain, Blast, World Chain, Avalanche and Zora Network.
As a successor to v2 and v3, Uniswap v4 is offering unlimited customizability or modification actions to the developers by new feature – Hook Contracts. The newly introduced feature of hook allows any of the developers to create new types of market structures, build bespoke trading features or make add-ons directly into the protocol – opening avenues for new startups to experiment and implement their own DeFi innovation. Developers can customize how pools, swaps, fees, and LP positions interact Unlocking tons of creativity, hooks by the third-party developers are deemed to drive deeper liquidity and more options for swapping.
If you are one of the developers and wish to create your own hook, the complete step-by-step guide can be accessed after clicking on ‘guide.’Apart from hooks, the white paper on v4revealed that it is also offering other new features such as Singleton, Support for Native ETH and Flash & Custom Accounting:
- Singleton contracts will hold all pool states in one contract.
- Custom Accounting will allow hook developers to alter end user actions – such as – adding withdrawal fees on LP positions, customized LP fee models etc.
- Native ETH is being bought back in Uniswap v4
- flash accounting will allow a caller to lock the pool and access any of its token as long as they are not owned by the end of the lock.
Moreover, the gas savings for both swappers and Liquidity Providers (LPs) are 99.99% cheaper than what was in V2 and V3.
How is Uniswap v4 different from its earliest protocols?
Launched in 2018, Uniswap v1 and V2 used constant product market maker (CPMM) model to facilitate ERC-20 <> ETH and ERC-20 <> ERC-20 swap while v3 introduced concentrated liquidity. Though the updated Uniswap V3 added flexibility for liquidity providers, it lacked flexibility to support new evolving functionalities of DeFi. Moreover, the previous versions required deployment of a new contract for new pools – ultimately increasing cost scales for the traders. However, this new protocol of v4 is built on the automated market maker (AMM) model aim to efficiently facilitate value exchange on the Ethereum Virtual Machine (EVM). Apart from it, Uniswap v4 is also supporting the mining/burning of Singleton-implemented ERC-6909 tokens.
Thus, the new customizable feature as it awaits for new hook contracts can indeed began “a new era for DeFi” by unfolding the creativity of third-party developers.
Disclaimer: The content may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
CoinGape
