Everything you need to know about Uniswap V4.

For the Web3 industry, we are currently in a bear market and we are about to go through a difficult June, but Crypto developers are not stopping their actions. Today, Uniswap released the Uniswap V4 version code draft so that the V4 version can be publicly built. After a conversation between Bankless and Uniswap founder Hayden Adams, all the functional updates of this upcoming V4 version were deeply understood.

Before we proceed, let's first familiarize ourselves with the specifics of the previous version V3. Uniswap V3 was released in May 2021 and introduced concentrated liquidity (providing liquidity within a specific price range), significantly improving the capital efficiency of DEX and establishing Uniswap's position as the largest DEX in the DeFi field. Currently, Uniswap holds a 57.4% share of the trading volume in DeFi on-chain, which is three times that of the second-ranked DEX in the field.

The vision of Uniswap V4 is to allow anyone to make these trade-offs decisions by introducing "Hooks". The following are the main features of Uniswap V4:

挂钩 Hooks

translates to

Hooks

in English.

The core feature of Uniswap V4 is Hooks, which are code snippets that run at a specific point in the lifecycle of a liquidity pool. Compared to previous versions of Uniswap, the new version offers higher customizability of the liquidity pool, making Hooks crucial for creating pools, adding/removing liquidity as an LP (liquidity provider), and before/after swapping.

For example, hooks can be used to create a fund pool with dynamic exchange fees based on market conditions, rather than pre-set and static exchange fees. At the same time, hooks also allow traders to place more complex orders, such as limit orders or TWAP (Time-Weighted Average Price) orders, which will buy/sell a certain amount of tokens over a certain period of time.

Not only that, but hooks also allow for the use of Uniswap liquidity in different ways. This is similar to Balancer's Boosted Pools, where liquidity beyond a certain range can be deposited into other protocols, such as lenders, to earn additional returns.

The above examples related to hooks are just some applications conceived by the Uniswap team. In addition, anyone can build and deploy their own hooks without the need for permission.

律动 BlockBeats Note: In DeFi, Hooks are a programming concept that refers to a set of functions or code snippets that are automatically triggered when a smart contract executes a specific operation. They can be used to execute custom logic before, after, or during specific events. Hooks provide developers with a way to execute custom logic at different stages of a smart contract. By using hooks, developers can create more flexible, customizable, and scalable DeFi applications.

「单例模式 The Singleton」

translates to

"Singleton Pattern The Singleton"

.

The second major change brought by Uniswap V4 is the introduction of the Singleton pattern. As the name suggests, Singleton is a single contract that contains all the different pools in Uniswap V4. This is different from previous versions of Uniswap, where each pool was stored in its own separate contract.

This pattern significantly improves the Gas efficiency of V4, as complex Swaps will be routed through a single contract instead of multiple different contracts, which would consume a lot of Gas. Using the Singleton pattern is estimated to reduce the cost of deploying new pools (i.e. new trading pairs) by up to 99%.

Singleton also utilizes Uniswap Labs' "flash accounting system." This will further reduce gas costs when trading on DEX, as only the net balance of tokens in the pool is transferred upon completing a swap. This is different from Uniswap V3, which transfers all assets involved in the trade in and out of the pool during the swap process.

治理、发布和分发

Governance, publishing, and distribution.

Uniswap V4 will be governed by the Uniswap DAO and holders of UNI Token.

Like V3 and V2 before it, this protocol will include a fee switch that Uniswap governance can activate on a per-pool basis to extract a portion of fees generated from liquidity providers.

V4 will be released under the Business Source License 1.1, which will last for four years and restrict the agreement to be used only by entities approved by governance.

Finally, it is worth noting that Uniswap V4 is not yet released. According to Hayden's podcast, the code for V4 has not been finalized and audited, so it will be announced at some point before the protocol is officially released.

对于 DeFi 的意义

The Significance of DeFi

V4 will have a wide-ranging impact on both Uniswap itself and the entire DeFi industry.

First of all, this upgrade should help Uniswap maintain its position as the DEX with the highest trading volume, as the pegging can improve the protocol's capital efficiency and is more customizable and gas-efficient compared to V3. The latter two features should help Uniswap attract more order flow from DEX aggregators and longer-tail heterogeneous trading pairs, while maintaining its dominant position in high-volume trading pairs such as ETH/USDC, ETH/USDT, ETH/DAI, etc.

In addition, this upgrade enables Uniswap to create more types of orders, such as TWAP and limit orders, which should help Uniswap attract more diverse traders to switch to DEX and enhance its competitiveness with CEX. From this perspective, the previous collapse of FTX and the recent regulatory pressure on CEX such as Binance and Coinbase have significantly increased on-chain trading activity, which may help DEXs like Uniswap become more competitive in cryptocurrency trading.

In May, the trading volume of DEX/CEX reached a new historical high, and then declined. With the gradual maturity of Uniswap V4, it seems to have a great opportunity to push this ratio to new heights.

Finally, V4 should help make Uniswap a more composable protocol. As we all know, Uniswap V3 has been difficult to build due to forking permissions and challenges in managing centralized liquidity positions. Between hooks and Singleton patterns, it seems easier to build and leverage liquidity with V4 compared to the V3 version. This could bring a wave of new interesting applications and inspire a wave of creativity at a time when innovation is urgently needed in the DeFi industry.

Overall, Uniswap V4 should help drive the development of the DeFi industry and bring a more complete future to DeFi. However, it will take some time before it is launched. At that time, DeFi will once again lead the crypto industry.

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