Uniswap V4 Code Draft Introduces Custom Liquidity Pools Plugins


Uniswap Labs has released the draft code for Uniswap V4. This update includes “hooks” or “plugins” which allow developers to create specialized liquidity pools.

Uniswap V3 was recently released in May 2021 and has been deployed on Boba Network. To launch the new version of Uniswap, several steps must be taken.

The code draft will be consulted by Uniswap users and adjusted over time. Then it will be proposed to UniswapDAO (the governing body of Uniswap) for a vote when a final version is agreed upon.

The “hooks” will provide developers the capability to create a range of innovations on the platform. These include limit orders, automated deposits to lending protocols, compounded liquidity provider fees, and more.

For example, the code draft supports TWAMMs – time-weighted average market makers – which permit users to sell large amounts of cryptocurrency gradually in smaller batches. This helps traders in avoiding negative price changes or being front-run by EVM bots. Additionally, on-chain limit orders will be possible by pools implementing logic to fill an order only at a specific token price.

The code also allows for the repositioning of fees back into an LPs pool or lending out inventory when a particular pool isn’t being used.

By volume, Uniswap is the biggest decentralized cryptocurrency exchange in the world, and the release of the Uniswap V4 is the first milestone to launching the new version. The next step is a vote by UniswapDAO.

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