Uniswap Labs has announced the draft code for Uniswap V4, a complete redesign of their popular decentralized exchange protocol. The new architecture aims to offer more customization and efficiency. The cost of creating liquidity pools is projected to reduce by 99%, and the protocol will permit developers to construct more cost-effective, minimalistic pools.
Uniswap V4 introduces the concept of "hooks" which are plugins for enhanced customization. Developers can leverage hooks to add new functionality and dynamically set fees for their pools. This could include features like on-chain limit orders. The team at Uniswap Labs has experimented with a hook that serves as a time-weighted average market maker (TWAMM), which spreads out orders over time.
A significant architectural change involves moving all Uniswap pools into a single smart contract. This shift reduces the need for token transfers between smart contracts and makes token swaps cheaper. It also significantly reduces the cost of creating new pools.
Uniswap V4 will also introduce a flash accounting system, which streamlines the process of routing trades through multiple pools, thus reducing transaction fees and offering greater flexibility.
The new protocol will coexist alongside V3 and will be audited and tested in public before an eventual release under a Business Source License 1.1. It's expected that the implementation process will span several months.
A significant architectural change involves moving all Uniswap pools into a single smart contract. This shift reduces the need for token transfers between smart contracts and makes token swaps cheaper. It also significantly reduces the cost of creating new pools.
Uniswap V4 will also introduce a flash accounting system, which streamlines the process of routing trades through multiple pools, thus reducing transaction fees and offering greater flexibility.
The new protocol will coexist alongside V3 and will be audited and tested in public before an eventual release under a Business Source License 1.1. It's expected that the implementation process will span several months.
