Uniswap Labs, the team behind the decentralized finance (DeFi) platform Uniswap, has announced its plans for the next iteration of its cryptocurrency exchange platform, Uniswap v4. In a departure from previous releases, Uniswap Labs is actively seeking feedback from the community before the public launch of the v4.
This approach aims to emphasize the DEX’s commitment to decentralization, distinguishing it from centralized exchanges like Coinbase and Binance, which currently face legal challenges from regulatory authorities.
Uniswap is widely recognized for popularizing automated market makers (AMM), which are blockchain-based smart contracts that enable cryptocurrency trades without intermediaries.
The latest version, the v3, was introduced in 2021 on the Ethereum blockchain and has since expanded to other networks. It currently holds the title of the largest decentralized exchange in terms of trading volume, having processed over $1 trillion in transactions since its inception, according to DefiLlama.
Uniswap v4 aims at enhancing coin-swapping
With the upcoming v4 upgrade, Uniswap Labs plans to enhance the platform’s coin-swapping capabilities through the introduction of “hooks” and custom liquidity pools. The CEO Hayden Adams explained that hooks act as plugins, allowing customization of interactions between pools, swaps, fees, and LP positions.
This could enable features like on-chain limit orders and dynamic fees, which are more commonly found in traditional exchange platforms but pose implementation challenges in a decentralized blockchain environment with no intermediaries or centralized order books.
Furthermore, Adams highlighted that the preliminary code for Uniswap v4 will introduce enhancements to performance and reductions in fees. Uniswap operates on a permissionless model, enabling anyone to create pools for trading compatible tokens. Under the v4 proposal, the network gas fees required to list new pools will be significantly reduced by 99%.
The v4 is expected to adopt the Business Source License 1.1, the same license used for v3. This licensing model aims to deter competitors from using Uniswap’s codebase to create similar applications. Several popular decentralized exchanges currently employ slightly modified versions of the DEX’s codebase to power their platforms.