Uniswap, the leading Ethereum-based decentralized exchange, has announced the rollout of its highly anticipated V4 upgrade. The new version promises significant improvements, including faster transactions, reduced gas costs, and enhanced flexibility for developers.

A key innovation is the introduction of "hooks," enabling customizable code for advanced trading strategies and new tokens. The hooks feature in Uniswap v4 is seen as a strategic move that could discourage the launch of competing protocols. It makes it easy for third-party developers to add new functionality directly to Uniswap, thus building upon the protocol instead of creating alternatives.

Another significant change in Uniswap v4 is the inclusion of all pools in a single contract ("singleton" architecture) and re-introduction of native ether support. Both should lead to significant gas savings, reducing transaction costs for users.

With nine audits and a record-breaking bug bounty program, Uniswap V4 aims to solidify its dominance in DeFi while driving mass adoption through affordability and innovation. "This is a quantum leap for Uniswap, redefining what’s possible in DeFi," stated the development team.

What Happens To Uniswap V1, V2 and V3?

With the release of V4, previous versions (V1, V2, and V3) will still remain functional, but their usage and liquidity will decline.

Uniswap V1, the original version of the code is currently largely abandoned. Most liquidity providers and traders migrated to V2 and V3 long ago. Only $8 million out of almost $6 billion value locked is currently on V1.

Some liquidity remains in V2 and the total value locked on the smart contract was relatively stable during the past years. At the time of writing it had $2.14 billion of digital assets in its pools, which makes around 1/3 of the total Uniswap TVL

Total Value Locked on Uniswap V2, Source: Defillama

V2 lacks the feature of Concentrated Liquidity introduced in Uniswap V3, which allows liquidity providers to allocate their capital within specific price ranges instead of distributing it across the entire price curve.

The major share of Uniswap's Total Value Locked, $3.8 billion, is currently on V3. Uniswap V3 will still be relevant, but it is expected to be challenged by V4's advanced features and cheaper gas fees. In a few hours after the launch, V4's TVL got to $1 million and counting.

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