Yesterday, Uniswap presented V4 of its DEX, which will allow the creation of customisable pools and reduced fees. Let’s take a closer look at what’s new
Uniswap presents the V4 of its DEX
Two years after the arrival of its V3, the decentralised exchange (DEX) Uniswap (UNI) presented its V4 yesterday. Still under construction at this stage, it nevertheless promises some interesting new features that deserve to be detailed.
1/ Today, we’re announcing our vision for Uniswap v4
We see Uniswap as core financial infrastructure and think it should be built in public with space for community feedback and contribution.
An early implementation of the code can be found here:https://t.co/toy3k7plnU pic.twitter.com/9vGJElba2x
– Uniswap Labs (@Uniswap) June 13, 2023
The first notable concept is called “hooks”. These are in fact smart contracts that allow a pool of liquidity to be completely customised to suit its needs.
These hooks can be seen as plug-ins, allowing developers to introduce functions such as on-chain limit orders or auto-compounding, so as to compound the interest generated by the fees charged on the cash deposited. The integration of personalised oracles or dynamic fees correlated to market volatility are also areas of exploration.
These changes could lead to a whole variety of different cash pools, thanks to the native modularity of this V4 :
“As each pool is now defined by more than just tokens and fee levels, we will see pools of all colours, shapes and sizes. “
A greatly optimised architecture
A crucial point of the future V4 of Uniswap is its “singleton architecture”. In short, liquidity pools will be attached to a single smart contract, which should reduce gas costs.
In fact, by creating a new pool using this model, a certain number of functions will already be deployed on the existing singleton smart contract, which could result in a saving of 99% on the said pool creation transactions.
In addition, the path for cryptocurrency exchanges will be simplified by this connection to a single contract.
To illustrate this, let’s imagine that an investor wants to exchange token A for token C, but only pools A/B and B/C are created. In the current model, token A will first be exchanged for B, then for C, which increases transaction costs. The smart contract singleton streamlines all this by simply updating the accounts in each pool concerned.
In addition, the source code for this V4 will be published under a licence granting Uniswap exclusivity for 4 years, before becoming fully open source thereafter. The release date has not yet been set, although the project teams are still expecting several months of work.
