Uniswap Labs, the blockchain project behind the decentralized protocol Uniswap, announced Tuesday its plan to unveil its latest iteration, the v4 upgrade. The company is seeking the public’s feedback as it shares v4 draft codes via its GitHub repository.
Since its inception in 2018, Uniswap has functioned as an Ethereum-based smart contract-enabled platform that facilitates crypto trading activities through automated market makers (AMMs) and liquidity pools.
The decentralized project has since evolved from v1 to its current v3 designed to meet users’ needs. According to blockchain aggregator DeFiLlama, Uniswap v3 holds the largest trading volume after processing over $1 trillion worth of cryptocurrency trades. Achieving such a figure is possible as Uniswap’s third version is integrated with several blockchains such as Ethereum, BNB Chain, Arbitrum, Polygon, and more.
What is Uniswap v4?
Uniswap v4 is an automated market maker protocol featuring “extensible and customizable pools.”
The yet-to-be-released upgrade is poised to step up the decentralized exchange’s coin-swapping feature through “hooks.” Uniswap Labs founder Hayden Adams explained what hooks mean in a blog post:
“Hooks are contracts that run at various points of a pool action’s lifecycle. Pools can make the same tradeoffs as v3, or they can add totally new functionality. For example, v4 will allow pools that natively support dynamic fees, add onchain limit orders, or act as a time-weighted average market maker (TWAMM) to spread out large orders over time.”
With hooks, liquidity pools would have more functionalities like fee adjustments and the creation of new order types. Adams added that the fees required to create new liquidity pools will drop by 99% in the v4 iteration.
By utilizing custom pools and a singleton, developers can harness Uniswap v4 technology when developing their own AMM without the need to build from the ground up. This allows them to leverage the established infrastructure of Uniswap, benefiting from its robust security measures and the existing user base, while still having the flexibility to create tailored AMM solutions to meet their specific requirements.
UNI Sees Mild Price Increase
Following the news of the upcoming v4 upgrade, Uniswap’s native token UNI saw a mild 7% increment. At the time of writing, the asset traded at $4.29.
Meanwhile, Uniswap Labs did not disclose a date for the upgrade deployment.
