What is Uniswap V4?

Uniswap V4 introduces the most customizable and capital-efficient version of the Uniswap protocol to date. Launched on January 31, 2025, this update expands developer control, reduces gas fees, and unlocks advanced liquidity strategies for traders and liquidity providers (LPs).

Key improvements include flash accounting to reduce token transfers, dynamic fees that adapt to market conditions, and a singleton contract that consolidates all liquidity pools into one system. The upgrade also restores native ETH trading, eliminating the need for WETH, and introduces hooks for deeper pool customization.

Uniswap V4 Features & How It Works

As outlined in the official Uniswap V4 Core whitepaper, the upgrade introduces a singleton contract that consolidates all liquidity pools, flash accounting to optimize token transfers, and hooks for developers to customize swap execution. Below is a deeper dive into the key features underpinning Uni V4.

Hooks

Uniswap V4 hooks are external smart contracts that allow developers to customize and extend liquidity pool behavior. Each pool can attach a single hook, while a hook can be used by multiple pools to modify execution flow at specific points in the pool’s lifecycle.

Use cases include:

• Pool-Specific Hooks: Hooks are optional and must be specified when creating a pool, allowing for targeted customization.
• Lifecycle Hooks: Execute logic before or after key events such as pool initialization, liquidity additions/removals, swaps, and donations.
• Granular Liquidity Control: Developers can modify how liquidity is added or removed using predefined hook functions.
• Custom Swap Execution: Hooks allow modifications to trade behavior, such as integrating alternative pricing models or additional swap conditions.
• Extended Use Cases: Hooks enable advanced DeFi applications, including custom AMMs, yield farming incentives, synthetic assets, and lending integrations.

Singleton Contract & Flash Accounting

Uniswap V4 introduces a singleton contract, managing all liquidity pools under one system. This reduces deployment complexity and lowers gas costs.

Additionally, flash accounting optimizes transactions by updating internal balances first and executing final transfers at the end. This ensures solvency while improving atomic swaps and multi-hop trades.

Native ETH Support

Uniswap V4 restores native ETH trading, eliminating the need to wrap and unwrap ETH into WETH. Native ETH transfers cost nearly 50% less gas than ERC-20 transfers.

By integrating ETH directly into liquidity pools, Uniswap V4 removes inefficiencies caused by liquidity fragmentation between ETH and WETH pools.

Custom Accounting

Custom accounting allows developers to modify token balances during swaps and liquidity events, overriding the default concentrated liquidity model. This enables withdrawal fees, alternative AMM curves, and customized LP reward structures.

Dynamic Fees

Uniswap V4 allows per-swap, block-based, or arbitrary time-based fee adjustments, optimizing fees on market conditions. Fee structures can adjust based on volatility, trading volume, and network congestion, ensuring liquidity providers are compensated fairly while minimizing costs for traders.

How to Use Uniswap V4

Uniswap V4 includes new pool management, customizable hooks, and cheaper liquidity provisioning while integrating seamlessly with previous versions. Whether swapping, providing liquidity, or building custom logic.

1. Swapping Tokens

Uniswap V4 makes token swaps seamless by automatically routing trades through the most efficient liquidity pools across V2, V3, and V4.

How to Swap Tokens on Uniswap V4:

1. Access Uniswap V4: Open the Uniswap web app and connect your wallet (e.g. Metamask).
2. Select tokens: Choose the ERC-20 tokens you want to swap from the dropdown.
3. Enter trade amount: Input how much to send or receive (0.1 ETH for the corresponding amount in USDC for example).
4. Confirm swap: The router finds the best liquidity path and executes the trade.

2. Providing Liquidity

Uniswap V4 allows liquidity providers (LPs) to create positions in pools with optional custom hooks for advanced strategies. Adding liquidity earns trading fees, with the flexibility to customize how the pool functions.

How to Provide Liquidity on Uniswap V4:

1. Open the liquidity page: Go to the Uniswap web app and click "Provide Liquidity."
2. Select Uniswap V4: Choose the "V4" option. If using a custom hook, enter the contract address (optional).
3. Set pool parameters: Choose the token pair, set the fee tier (e.g., 0.05%, 0.3%), and define your price range.
4. Approve and deposit: Confirm token approval in your wallet, finalize the deposit, and start earning fees.

3. Creating a Pool

Uniswap V4 allows users to create liquidity pools without permission, enabling new trading markets and custom liquidity strategies.

How to Create a Pool on Uniswap V4:

1. Open the pool creation page: Go to the Uniswap web app and select "Create Pool."
2. Set pool parameters: Choose the token pair (e.g., ETH/USDC), select a fee tier (e.g., 0.3%), and define tick spacing.
3. Initialize the pool: Developers can set an initial price using PoolManager via smart contracts or web3 tools like Foundry, Hardhat, or Etherscan.
4. Deploy with or without liquidity: Either fund the pool immediately using PositionManager or reserve it for future liquidity.

4. Developing Hooks

Uniswap V4 hooks let developers customize swap execution, dynamic fees, and liquidity strategies, adding flexibility to liquidity pools.

How to Develop and Implement Hooks on Uniswap V4:

1. Set up a project: Install Uniswap V4 dependencies (v4-core, v4-periphery) and configure remappings.
2. Write hook logic: Develop smart contract functions that adjust swaps, fees, or liquidity behavior.
3. Deploy the hook contract: Use Foundry or Hardhat to deploy the contract and retrieve its address.
4. Attach the hook to a pool: When creating a pool, specify the hook contract address to modify the execution flow.

Uniswap V4 vs V3 and Older Versions

Uniswap V4 keeps the concentrated liquidity model from V3 but replaces separate pool contracts with a singleton contract, cutting gas costs. It also features flash accounting, reducing unnecessary token transfers, and native ETH support, eliminating the need for wrapping ETH.

Compared to earlier versions, V4 is the most gas-efficient. V1 and V2 had simpler AMM models, while V3 improved capital efficiency at a higher cost, V4 refines this with cheaper swaps, automated liquidity management, and pool-level customization via hooks.

What is ERC-6909?

ERC-6909 is a token standard from Uniswap V4 that enables the management of multiple ERC-20 tokens from a single contract. It maximizes transaction efficiency by using internal accounting, lowering gas costs for claims, redemptions, and liquidity management.

Unlike ERC-1155, Uniswap V4's ERC-6909 eliminates unnecessary callbacks, simplifies transfer delegation, and reduces contract size. It also introduces a total supply variable to track minted and burned tokens, benefiting high-frequency traders and liquidity providers by enabling tokenized claims.

Uniswap V4 License

Uniswap V4 is licensed under a Business Source License (BUSL), restricting commercial or production use of its source code until June 15, 2027, when it transitions to an MIT license. Uniswap Governance can grant exceptions to the BUSL through Additional Use Grants, similar to Uniswap V3.

About Uniswap

Uniswap was founded in 2018 by Hayden Adams as the first major decentralized automated market maker (AMM) and has since become the largest decentralized exchange (DEX) by trading volume.

Across Uniswap V2 and V3, the protocol has processed over $2.75 trillion in trading volume and 465 million swaps, all without a single hack or exploit.

Recent milestones include nine independent audits, a $2.35 million security competition with over 500 participants, and the largest bug bounty in history, offering up to $15.5 million for critical V4 vulnerabilities.

Final Thoughts

After a $15.5 million bug bounty program, Uniswap V4 launched on 10 blockchains, including Ethereum, BNB Chain, Arbitrum, Base, and Polygon. In the first two weeks, migration from V3 to V4 has averaged $7 million in TVL per day, reflecting steady adoption.

Uniswap V4 is expected to greatly impact liquidity providers (LPs) and investors by reducing operational costs. The new Singleton Contract lowers gas fees by up to 30%, while Dynamic Fees ensure LPs earn more during periods of high volatility.