Uniswap V4 code draft features custom liquidity pools plugins

• By volume, Uniswap is the biggest decentralized cryptocurrency exchange in the entire world.
• The release of the Uniswap V4 is the first step to launching the new Uniswap version.
• The final stage before launch is a vote by UniswapDAO.

Uniswap Labs has released a draft of the code for its Uniswap V4. The updated code features “hooks” or “plugins” that let programmers design customized liquidity pools.

The most recent Uniswap version, the Uniswap V3, was released on May 2021 and it recently deployed on Boba Network.

Uniswap V4 draft code

According to a post published today by Uniswap’s Founder, Hayden Adams, when the V4 is implemented, the “hooks” feature will enable developers to add many new innovations to the exchange, including on-chain limit orders, automatic deposits to lending protocols, automatically compounded liquidity provider (LP) fees, and many more.

According to Adams in the post, the purpose of Uniswap V4 is to:

“Create a way for pool deployers to introduce code that performs a designated action at key points throughout the pool’s lifecycle – like before or after a swap, or before or after an LP position is changed.”

Deployers will be able to make time-weighted average market makers (TWAMMs), for instance, which let users sell large amounts of cryptocurrency gradually in smaller batches. This could help traders in avoiding negative price changes or being front-run by EVM bots. Additionally, on-chain limit orders will be feasible because pools will be able to implement logic that will allow them to fill an order only when a token reaches a specific price.

Another example of the featured “hooks” is code that allows for the repositioning of fees back into an LPs pool or lending out inventory when a particular pool isn’t being used.

Steps to launching the new Uniswap V4

Releasing the source code is the first step in launching a new version of Uniswap.

The group now intends to consult with Uniswap users and iterate on this foundational code over time. Afterwards, V4 will become a formal proposal to be presented to Uniswap’s governing body, UniswapDAO, once enough agreement has been reached on a final version of it.