Uniswap's V4 Sneak Peek: A New Chapter In Decentralized Exchanges With The Introduction Of 'Hooks'

Uniswap Labs UNI/USD has unveiled a sneak peek into the draft code of Uniswap V4, which brings to the table an innovative feature called “hooks” or plugins, which empower developers with the ability to design tailor-made liquidity pools.

Renowned as the globe’s biggest decentralized cryptocurrency exchange in terms of volume, Uniswap's current version, V3, was launched on May 4, 2021.

In a blog post, the founder of Uniswap Hayden Adams stated that the trailblazing “hooks” attribute of V4 enables developers “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.”

This implies that V4, once operational, will bolster on-chain limit orders, automated deposits to lending protocols, auto-compounded liquidity provider fees, and a plethora of other advancements within the exchange.

With the draft code now out in the open, the Uniswap team is eager to engage with the community members and refine the base code progressively.

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The launch of V4 will be triggered once there is sufficient agreement regarding the final version.

However, earlier versions will continue to be accessible.

Furthermore, Uniswap V4’s “hooks” will allow deployers to institute time-weighted average market makers (TWAMMs).

This feature will facilitate users in selling vast quantities of cryptocurrency in incremental batches over an extended period.

This innovation is aimed at protecting traders from falling victim to price slippage or getting outpaced by EVM bots. Moreover, thanks to the “hooks”, on-chain limit orders will become viable, as liquidity pools will have the capacity to embed logic that executes an order only when a specific price threshold is reached.

Other potential uses for “hooks” include coding that can automatically reinvest fees into a liquidity provider's pool or lend assets when a certain pool is dormant.

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