In this article, we dive into Uniswap v4
Who this is for:
Students and beginners who want to understand what Uniswap v4 is, why it matters, and how it works, in plain English.
So what is Uniswap?
Uniswap is a decentralized exchange (DEX). It lets people trade crypto tokens directly from their own wallet.
There is no company holding your money. Smart contracts do the work. It’s all just bunch of codes running on-chain
An AMM (Automated Market Maker) sets prices based on math, not a traditional order book.
Now, what is new in Uniswap v4?
Uniswap v4 is a big upgrade. It focuses on three things:
More POWER 💪 for developers
Lower gas costs
Better user experience
The main new idea is called hooks. Hooks are like “plugins” that can add new features to a pool without changing the core Uniswap code.
Why this even matters? Why do we need it?
For developers they can build features like limit orders, dynamic fees, or new AMM styles using hooks. Create pools cheaply using one main contract (singleton). Faster to experiment.
For traders then, it means lower gas fees for swaps (especially multi-hop). Use native ETH (no need to wrap into WETH). Future features like stop-loss could be built by the community.
For liquidity providers (LPs), it means more control over how your liquidity works. You may earn more if a pool has custom fee rules. Try new strategies.
For the DeFi ecosystem: Uniswap becomes a programmable DEX. This can speed up innovation and make apps easier to build.
Key ideas, explained simply
1) Hooks: plugins for pools
Problem before:
You could not easily add custom features to pools. You had to fork Uniswap or write a whole new system.
What v4 does:
Lets developers attach a hook contract to a pool. The hook can run code at important moments, like:
before and after a swap
before and after adding/removing liquidity
before and after pool initialisation
before and after donate()
What this means:
You can add logic such as:
dynamic fees based on volatility
limit orders or time-based trades
special rules for rewards or analytics
Safety note here!!! 👷👷👷
Hooks must be predictable and use limited gas. Bad hooks can be risky, so audits and reviews matter.
2) Singleton: one main contract for all pools
Problem before:
Each pool was a separate contract. That cost more gas and made multi-hop trades expensive.
What v4 does:
All pools live inside one “PoolManager” contract. Each pool has a PoolKey (like an ID) with its settings.
What this means:
Cheaper to create pools. Multi-hop trades are simpler and cost less because everything happens inside one place.
3) Flash accounting: settle once per transaction
Problem before:
Tokens were moved step-by-step during a swap. This caused many transfer calls and higher gas. Meaning to achieve one thing, we need to do multiple different transactions
What v4 does:
Tracks who owes what during the transaction using temporary storage. Moves tokens only once at the end.
What this means:
Fewer token transfers. Lower gas, especially for multi-hop swaps and batch actions.
4) Native ETH support (FINALLY!!)
Problem before:
You had to wrap ETH into WETH to trade. Extra steps and extra gas.
What v4 does: You can trade using ETH directly, saving gas fees
What this means: Much much much better user experience and lower gas for ETH trades.
5) Custom accounting via hooks
What it is:
Hooks can change how fees, balances, or outputs are handled.
Examples:
Charge higher fees when volatility is high (using an oracle).
Run a time-weighted AMM (TWAMM) to spread orders over time.
Why it matters: You can build new AMM designs without changing Uniswap’s core.
There is a few more components inside the upgrade, however, it’s a bit too long to write in this blog. So here is the whole tldr 👇
TL;DR:
Uniswap v4 turns Uniswap into a programmable DEX. Hooks let developers try new ideas safely, without changing the core. The singleton design and flash accounting save gas and simplify complex trades. Native ETH makes the UX better. With care and good audits, v4 can be a strong base for the next wave of DeFi apps.
Sources:
- Uniswap v4 whitepaper: https://app.uniswap.org/whitepaper-v4.pdf
- Uniswap v4 docs: https://docs.uniswap.org/contracts/v4/overview
- Deep dive and examples: https://www.cyfrin.io/blog/uniswap-v4-vs-v3-architectural-changes-and-technical-innovations-with-code-examples
- Related research: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5152215