Uniswap launches V4 with customized pools and swaps

Uniswap, one of the leading multi-chain DEX, announced the long-awaited official launch of V4, which will allow developers to customize trading pairs and liquidity pools. 

Uniswap announced the release of its V4 protocol in a post on Friday. It said the protocol will soon start to build up liquidity but is currently available on 10 networks. 

Uniswap v4 is here🦄

Users can LP on v4 through the Uniswap web app and swapping is rolling out over the coming days on web and wallet as liquidity migrates to v4

Live on Ethereum, Polygon, Arbitrum, OP Mainnet, Base, BNB Chain, Blast, World Chain, Avalanche, and Zora Network pic.twitter.com/fXC9GHEsaL

— Uniswap Labs 🦄 (@Uniswap) January 31, 2025

V4 launches after nine rounds of security auditing, along with a $15.5M bug bounty. Per the report, V4 will initially be available through the Uniswap web app. The new version will launch with the option of adding liquidity, and swaps will start in the next few days. The potential for trading will depend on how liquidity migrates to the new pairs. 

The new version will allow for customization through the hooks technology. Hooks will allow developers to determine how pools, swaps, fees, and liquidity positions interact with the end users. Until recently, V4 was not unrolled and did not invite liquidity, while developers only showcased the first hook smart contracts.

V4 pools will also be significantly cheaper to create, opening the door to more active meme token trading. 

For end users, V4 will be integrated seamlessly. When using Uniswap routing, V4 will be included for potential sources of liquidity and swaps. More features and hooks will unlock as Uniswap expands the new version. End users can also select to route manually through V4 where available. Default options through the Uniswap app will route through V4 if the fees and liquidity are optimal.

Traders will also be able to choose Uniswap V4 as their priority swap route. However, some complex hooks, such as those mimicking a limit order, may alter the way the swap is performed. Unless the trader specifically chooses to engage with those pools, they will not be included in the usual Uniswap routing. 

Uniswap V4 starts with 150 customized markets

Uniswap urged developers to showcase their hooks, or smart contract plugins, which add another layer to liquidity management. 

Hooks replace the need to open new types of DEX or offer special pairs. Hooks can include anything from dynamic fees to automated liquidity management. Hooks will change Uniswap’s automated market-making, which calculates asset prices based on the available liquidity in a pool. 

Hooks can alter the liquidity of an asset and allocate resources to thinner markets. Some hooks provide specific oracle information or fetch volatility data. The customized decentralized pairs can also mimic limit orders or order books, as well as concentrated liquidity. The content and goals of hooks will depend on the creativity of developers. 

Uniswap will also offer grants to developers, especially those interested in hooks to increase security in DEX swaps. Uniswap will offer support when developing projects of interest, as in the case of hooks to protect traders against MEV bot attacks. 

UNI breaks out from one-month lows

UNI is considered undervalued based on the constant fee production by Uniswap. UNI traded at $11.98, after breaking above its one-month lows. UNI open interest slid slightly from $198M down to $185M after the recent market correction. 

UNI does not reflect the exchange’s increased activity and accelerated fee production. The current versions on Uniswap, active on some of the leading L1 and L2 chains, produced up to $146M in fees for the past month. Uniswap fees rose from about $56M in September 2024 up to $143M for December. 

The DEX aims to retain its position after trading shifted to Solana markets Raydium and Meteora. Uniswap moved out of the top 10 of fee producers after the Solana ecosystem and meme tokens took over decentralized activity. Uniswap carries more than $5.95B in liquidity locked on all chains, although V3 on Ethereum remains the busiest version. 

Beyond meme tokens, DEX activity is also widely used to swap between stablecoins, wrapped ETH and WBTC, and other assets used within DeFi protocols. The hooks to mitigate risk and secure liquidity may retain the large-scale orders going through Uniswap. The DEX is also taking the bulk of traffic on L2 chains Arbitrum and Base.

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