Hayden Adams joins us to announce the release of Uniswap V4! He walks us through innovations new to Uniswap like hooks and singleton contracts in addition to a new upgrade that can lower gas costs up to 90%.
 
 To launch V4 we need your help, the community, to contribute your opinions and decide the fate of this new protocol.
 
 ------
 📣 ASYMETRIX PROTOCOL
 https://bankless.cc/asymetrix 
 
 ------
 🚀 Unlock $1,000+ in Perks with Bankless Citizenship 🚀
 https://bankless.cc/GetThePerks 
 
 ------
 BANKLESS SPONSOR TOOLS: 
 
 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE
 https://k.xyz/bankless-pod-q2  
 
 🦊METAMASK LEARN | HELPFUL WEB3 RESOURCE
 https://bankless.cc/MetaMask  
 
 👾STADER LABS | ETHX LIQUID STAKING
 https://bankless.cc/Stader
 
 ⚖️ ARBITRUM | SCALING ETHEREUM
 https://bankless.cc/Arbitrum  
 
 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION
 https://bankless.cc/Toku  
 
 🎮IMMUTABLE | GAMING ECOSYSTEM
 https://bankless.cc/Immutable  
 
 🛞MANTLE | MODULAR LAYER 2 NETWORK
 https://bankless.cc/Mantle 
 
 ------
 TIMESTAMPS:
 
 0:00 Intro
 5:56 Introducing Hayden
 7:37 V4 Launch Date?
 9:12 What Goes Live Today?
 10:28 How Far Has Uniswap Come?
 12:14 Can Uniswap Get Any Bigger?
 13:52 Are Centralized Exchanges Competitors?
 16:28 Why Do We Need V4
 20:10 V4's Flagship Feature
 24:47 Introducing, TWAM
 28:29 A New Uniswap Fee Structure
 33:57 How V4 Solves Efficiency
 38:27 Singleton Contracts
 41:08 The Gas Refund
 43:29 The Hook Centric Roadmap
 46:59 What Rollups Will Uniswap Live On?
 51:34 Who Will Be Building Hooks
 58:20 Fees On Withdrawals
 1:05:35 Why Hooks?
 1:10:18 Will Liquidity Migrate To V4?
 1:16:34 How V4 Is Like a Centralized Exchange
 1:20:47 Is This The Last Uniswap Upgrade?
 1:22:38 Has Defi Peaked?
 1:30:10 How To Get Started On V4
 
 ------
 RESOURCES:
 Uniswap V4 Blog Post: https://blog.uniswap.org/uniswap-v4 
 
 Hayden Adams: https://twitter.com/haydenzadams  
  Uniswap Labs: https://twitter.com/Uniswap  
 
 Hayden Last on Bankless: https://www.youtube.com/watch?v=9fqJzS08pPc  
 
 ------
 Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.
 
 Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here:
 https://www.bankless.com/disclosures

1 cool thing about the singleton design is it actually reduces current estimates, have it have it reducing the gas cost of pool deployment by about 99%.

Sometimes people pay when gas costs are high, like north of a thousand dollars to deploy a pool, just a gas cost.

And that same deployment would be something like $10.

There's a big announcement for everyone in DeFi today.

We have Hayden Adams on the podcast to tell us more.

How big of a deal is this from an order of magnitude size?

We also talk about hooks, this idea of a modular Uniswap.

What is the future for liquidity on Ethereum?

Does Hayden still think we're on track to eat traditional finance?

All of these topics unpacked in the episode today.

Guys, before we begin, though, I want to tell you about a prize-linked ETH denominated savings account from our friends and sponsors at Asymmetrix.

It is a way to make your ETH staking super exciting or super boring or super exciting.

If you want that 4.5, 5% ETH stake to range anywhere between 0% or 1000%, asymmetrics may be for you.

So asymmetrics, it's a little bit like pool together, Same kind of concept where everyone stakes their ether, but only the yield goes to 1 person who gets a lot of yield while everyone else gets 0 yield.

This is why Ryan called this a prize-linked savings account.

So If someone just feels like a little bit extra lucky and they want to add some excitement to their ETH staking, they can go to banklist.cc slash H-symmetrics to get anywhere between 0 or 1000% stake on their yield.

Ryan, diving into this episode, when I was learning about Uniswap v4, I really just got visions of a microcosm of Ethereum.

So I'm calling this the hook-centric roadmap for Uniswap, whereas Ethereum has its roll-up-centric roadmap.

Uniswap now has hooks, and it allows for Uniswap base to be extremely primitive but hooks to reintroduce complexity into the Uniswap AMM on an opt-in basis and I think this really gives a lot of power to builders who want to make their Uniswap pools very expressive.

Overall, it starts off as a very small update.

V4 is a small update to V3, but the cool thing is that the size of how awesome and powerful Uniswap v4 is actually grows alongside the open source developer community around Uniswap.

Hayden's gonna unpack it for us in this episode.

Small disclaimer, Uniswap Labs is a sponsor of Bankless.

They currently sponsor the Bankless podcast.

But Uniswap V4 is an episode that we would never miss.

And so we're having Hayden Adams, the inventor of the Uniswap protocol on to discuss all about Uniswap V4.

So let's go and get right into the conversation with Hayden Adams.

But first a moment to talk about these fantastic sponsors that make this episode possible, including and especially Kraken, our preferred crypto exchange for 2023.

If you are scared that the operation choke point is going to choke us off, maybe you should get all of your fiat money into the crypto world, and perhaps you should use your brand new account with Kraken to do so.

Kraken Pro has easily become the best crypto trading platform in the industry.

The place I use to check the charts and the crypto prices, even when I'm not looking to place a trade.

On Kraken Pro, you'll have access to advanced charting tools, real-time market data, and lightning fast trade execution, all inside their spiffy new modular interface.

Kraken's new customizable modular layout lets you tailor your trading experience to suit your needs.

Pick and choose your favorite modules and place them anywhere you want in your screen.

Whether you are a seasoned pro or just starting out, join thousands of traders who trust Kraken Pro for their crypto trading needs.

Visit pro.kraken.com to get started today.

From the other layer twos you may be familiar with.

Mantle is a modular layer 2 built on the OP stack, but uses Eigen layers data availability solution instead of the expensive Ethereum layer 1.

Not only does this reduce Mantle's gas fees by 80% compared to other layer twos, but it also reduces gas fee volatility.

Mantle has a decentralized sequencer set, eliminating the risk of downtime and censorship on the network.

And because Mantle implements multi-party computation nodes, layer 1 settlement execution is shortened from 7 days to as low as just 1 or 2.

Mantle is the first layer 2 built by a DAO and is backed by 1 of the biggest DAO treasuries in the world, BitDAO.

Mantle already has sub communities from around Web3 onboarded to help the growth of Mantle, like Game7 for Web3 Gaming, or EduDAO for the world of Deci, and Bybit for TVL, liquidity, and on-ramps.

Check out Mantle at Mantle.xyz and follow them on Twitter at 0xMantle.

Immutable is at the forefront of Web3 gaming on a mission to bring digital ownership to every player, offering the world's best games and game development platform.

Immutable lets game builders and players focus on great gaming experiences.

So build your next web 3 game on easy mode with Immutable's leading full stack web 3 gaming platform.

It's built in UX features like the Immutable Passport are designed for games to scale to the next billion players coming to Web3.

With Immutable, players can sign up with an email, pay with a credit card, and experience a frictionless purchase flow inside of games.

So, discover your next favorite game and explore a network of 150 games building on Immutable, including such titles as Gozem Chain, Guilds of Guardians, Illuvium, Embersword, and Metalcore.

So join Web3's largest ecosystem of games and players.

Build, play, and connect at Immutable.com.

Bankless Nation, I would love to introduce you to Hayden Adams, the inventor of the Uniswap protocol and CEO of Uniswap Labs, a software company building on and around Uniswap.

And today, Hayden is here to talk about the vision behind Uniswap v4 and what it could mean for liquidity on Ethereum.

So excited to be here and to talk about Uniswap v4.

Yeah, Hayden, are we getting a new Uniswap?

Long answer is that the process of getting a new Uniswap is going to look a little bit different this time around.

that a really important starting point is that we see Uniswap as very similar to Ethereum itself, where it's a core piece of infrastructure, public infrastructure on which thousands of teams are building, there's hundreds of thousands of liquidity providers.

And it's really just this public infra for the entire space.

It has about, at times it has over 90% market share for on-chain trading on Ethereum at least.

And so, you know, similar to how Ethereum has this like public process for it being rolled out, And there's a lot of time for people to respond and react and give feedback and input.

There's time for all the different projects building on top of it to begin preparing their infrastructure and build on top of it.

With this version of Uniswap, we really wanted to build it in public.

And so what we're rolling out today is basically a vision for Uniswap v4, as well as a white paper and a draft of the code.

So the code is, we have an initial code base and it works and it proves that it can work, but it's not final.

And we don't expect it to be final for many months.

Okay, so the big new announcement is Uniswap v4!

And also the way that Uniswap v2 and V3 were built was it was built and then I think within a month, both of them were live on mainnet.

And this is not what is going to be happening with V4.

There is no release date, if I'm correct, and it's just a very long open period for public collaboration, community engagement, public conversation to tinker with Uniswap v4.

Yeah, I think that, you know, Uniswap v3 was kind of like a Beyonce Lemonade album drop where when we released it, it was this cool thing and it was entirely ready and it was a surprise.

And I think this time around, and honestly 1 of the pieces of feedback we got at the time was, hey, this is really cool.

This is going to take me like a month to understand, let alone build an entire integration on top of.

The other aspect of it is that there were even like, at the time that we announced it, the code base was basically frozen and already well underway of auditing.

And so there wasn't time to incorporate any pieces of public feedback.

And there were like very, very minor things that people, I mean, it was like a very good code base.

We did a really good job, but it was like, there was like minor pieces, uh, very minor improvements people found at the time and, you know, they weren't really able to be, uh, integrated.

And so with Uniswap v4, there's going to be many, many months.

Uh, there'll be time for people to, you know, open issues to, to submit, you know, submit PRs, there's contribution guidelines.

Uh, and there's a lot of time for people to start planning integrations and start building on top of it.

So what are we getting right now, Hayden, at the time this episode is released?

What can people go get busy with and start digging into?

Yeah, so first we have the blog post, which just outlines a high-level overview of what it is, or at least what our vision for it is.

Similar to Ethereum, you have a sense of where things are going, right?

We had this sort of vision of proof of stake and then everyone started marching towards it.

So we have this vision for what Uniswap v4 is.

We have a white paper that gives a lot more background and technical information, you know, and supporting, you know, math, et cetera.

And the code base really just contains a full draft implementation.

And we aren't going to march straight towards audit or production ready.

We're actually going to give space and time for people to contribute and to give feedback into it.

And so, yeah, right now we have an initial implementation.

We have a vision, excited to talk about what

Before we get into the vision of V4, I want to just maybe zoom out for a minute, because it's not often, Hayden, that we're able to get you on Bankless and have this kind of conversation.

But let's zoom out all the way back to 2018.

And I'm wondering if you could kind of like share how far Uniswap has come from that point in time.

I was reading the blog post a little bit earlier something like

Trillion in value flows through this platform.

Give us some of the numbers that you look at to understand Uniswap's progress and its impact.

Yeah, I mean, it's been an absolutely insane journey.

We have the previous Bankless episode we did where we really went through a lot of the early days.

But since then, it's just been absolutely insane.

I guess a few of the things that we look at that are pretty interesting, definitely like total all-time volume traded is north of 1.5 trillion at this point, which is pretty crazy.

There's billions of dollars in daily trading, hundreds of thousands of liquidity pools created, hundreds of thousands of liquidity providers, millions of traders.

Even just the amount of the market share on Ethereum, it's north of 90% at times of on-chain trading on Ethereum.

It trades off at different times, but it's been trading off with Coinbase in total trading volume.

All sorts of things that we look at to just show like the amount of activity happening on top.

I wish I had a number for the amount of projects building on top of it.

My like intuition says tens of thousands, not just thousands, you know, just because of the number of, of, you know, tokens and projects that exist.

So, so given all this Hayden, 1 question in my mind is like, can Uniswap get even bigger?

Like I mean, haven't we seen all the growth?

Aren't the growth years already behind us?

How can this thing possibly get any bigger?

I definitely think that Uniswap can get much bigger.

Definitely like in terms of like market share on Ethereum, it's hard to get much bigger.

There's very marginal gains to be had there, right?

And so I'd say that where Uniswap grows bigger is about basically growing the entire space, about having, you know, more, enabling more, you know, things to be built on top of it, you know, basically growing the entire, growing the space around it and really, you know, taking innovation that currently happens external to Uniswap and having that innovation happen within Uniswap.

I think that 1 pretty important nuance here is that Uniswap has this dominance in market share, but there is a lot of innovation today that does happen in the AMM space and a lot of experiments.

And maybe a little bit of a spoiler alert for some of the stuff that's coming is that a big part of what we're trying to do with Uniswap v4 is make it easier for people to experiment and innovate, even on AMM design and functionality, but having that happen still within the swap ecosystem.

I mean, I remember at 1 point in time when DEXs were still in their infancy and we were just hoping to get a

So basically, all of the exchange volume happened with centralized exchanges.

And wouldn't it be great if we could actually get this whole decentralized exchange thing off the ground and we could eke out maybe double digit percentage of volume?

How do you think of the competitive landscape these days?

Do you consider centralized exchanges as competitors or would you like draw those lines differently than maybe we did back in

Yeah I think that it's you know a pretty interesting, I say that generally like decentralization offers some fundamental advantages And the way that we always think is how do we expose those advantages to more people?

I think centralized exchanges are going to continue to exist.

But I think that there are really strong advantages of decentralized exchanges.

And even things that are centralized exchanges today will start tapping into the liquidity from decentralized exchanges over time.

In terms of where it actually ends, Really, I think that first it's DeFi growing bigger than CeFi, and then it's DeFi growing bigger than TradFi.

And the purpose of that is not for its own sake, but because we think that that leads to a world with fairer, better financial system, more accessible financial system, just a better world in general.

Well, maybe we talk about them too much David.

I'm not sure I'll let the listeners decide but it's it's definitely why we enjoy having Hayden on the podcast to kind of rearticulate it It's been baked into the DNA of Uniswap from from day 1 to provide a bankless exchange experience where user can retain custody of their private keys and their assets.

And that is certainly, we don't talk about it as much now in 2023, right?

But like, that is the core of this entire movement.

Yeah, I think, you know, it's what you said, like a lot of the time, kind of people have been in the space for a really long time, like take it for granted.

And instead of like, yeah, of course, we're doing all that stuff.

Like The values are super important and really important to guiding even day to day decisions.

So Hayden, I'll admit when Uniswap V3 came out and concentrated liquidity, added in just a whole entire layer of expression onto Uniswap V3, Uniswap in general, I was like, oh, that's the last Uniswap.

It's the logical conclusion that Uniswap v3 is now Uniswap.

So what was incomplete about Uniswap v3 that we need Uniswap v4?

So let's start unpacking the Uniswap v4 box.

What does v4 bring to the table that v3 still had left to complete?

Yeah, So, you know, Uniswap v3, I don't think we, I think it was a really, really good protocol, right?

There's a reason it has such dominance today.

It's really efficient, really flexible for liquidity providers relative to previous editions.

I think that like what the, maybe the 1 thing, right, that we really wanted to tackle with v4 is Uniswap v3 was also extremely opinionated.

And what I mean by that is when you have these immutable smart contracts, The rules for it are kind of set in stone at creation.

And the more you can modify and upgrade, in certain ways it compromises on certain security properties and compromises on other things as well.

And so I think that, you know, with, as an example, right, in the process of designing Uniswap v3, there were like a million trade-offs that had to be made.

And, you know, 1 example trade-off is the price oracles.

So the price oracles were really just, you know, basically at the beginning of every swap, the contracts store the first swap of every block, it stores the price and adds it to these accumulators.

And with that, you can basically, other applications can extract really efficiently average prices across any period of time in the swap, in that swap pair.

And that's a really, you know, it was a really good, almost like public good for the space.

Many other projects have built on top of that feature.

At the same time, running that logic for these price accumulators actually is a gas cost that is paid by swappers every swap.

And so you can think of maybe something like 10%, don't quote me on it, of the gas of swaps is going to updating these price oracles.

And that amounts to a huge amount of money that swappers are paying over a period of time.

And the thought process was basically like, well, if Uniswap can be used in more ways and in more places, then ultimately that will lead to more usage of the protocol, more liquidity in the protocol, and that will be better for swappers and offset the increased gas cost.

Some pools, the oracles do get used, and they're tightly integrated into important protocols.

And in some pools, maybe they don't get used at all.

Probably the majority of pools, actually, they don't get used at all, and that's just like a tax on swappers paid over time.

And the kind of opinionated way that v3 was implemented, that isn't a choice that you can make when you deploy a pool.

So I'd say that the flagship feature of Uniswap, actually before I even, I'd say another area that is really interesting as it relates to the opinionated nature is fees and how fees are implemented.

You know, most, like, there's a lot of different people who kind of experiment with, we're gonna build our own AMM.

And usually what they're doing is actually just like experimenting with the fee logic.

Sometimes they're doing other things, but that's like the most common thing that people do.

People are building entirely new Uniswap forks, and what you're saying is like, and they're really just tinkering with the fee model.

And so they're building out entirely new exchange just to tinker with fees.

Sometimes, and maybe sometimes they're doing other changes as well, but sort of no matter what, they're probably doing more work than they should have to, if all they're really trying to do is modify the functionality of a pool.

And so I guess we'll get to the point of it, which is the flagship feature of Uniswap v4 is what we're calling hooks, which are essentially modules or customizations that you can make when you deploy a pool.

And anyone who's creating a pool can choose what hooks their pool uses.

And they allow you to add on new features, new functionality, modified parameters of the pool in really interesting and meaningful ways.

So you started off this conversation with oracles and then also talked about fees and these are all things, opinions that you're saying Uniswap v3 had.

If you wanted to start a new Uniswap v3 pool, you had embedded in it this Oracle feature, whether you asked for it or not, and then because of that feature, swappers who touch the logic of every single V3 contract every time they swap, pay for that complexity to be built into that V3 pool.

So what you're saying is Uniswap V4 has these things called hooks that are generalizable things to insert into a v4 pool.

So I'm guessing a base v4 pool, a v4 Uniswap exchange, has almost 0 features built into it just like by default.

And then the idea is you can opt into certain features like the Oracle, like fee structures, et cetera, after the fact, but the standard issue Uniswap v4 exchange is just like bare bones, primitive, reductive, maximally simple, maximally cheap, maximally efficient.

I think that the, you know, the funny enough, Uniswap v4 actually has like the base system has almost less features, right?

Because the oracles have been taken out of the contract

And so, you know, in the process of building v4, we also built a whole bunch of example hooks to show how expressive it is and the types of things that you can do.

You know, the simplest form actually has fewer features in a certain sense.

So, Uniswap v4, I could just start going through some examples of what you can do with hooks.

Maybe we'll make it more, make it more clear.

So, you know, 1 example is definitely dynamic fees.

So right now, you know, Right now when you deploy a new pool, the pool creator gets to choose between a few fixed fee tiers.

In v3 you choose between, you know, there's like 4 different fee tiers today and governance has the ability to add more.

And the reason that there weren't like arbitrarily many is, you know, to encourage, you know, to kind of discourage liquidity from overly fragmenting and encourage people to consolidate around specific pools.

With Uniswap v4, when you deploy a pool, you can choose any fee you want as a static fee, or you could attach a dynamic fee hook.

And the dynamic fee hook could actually customize the logic of your fee in any way you want.

1 example would be that you could do, you could basically try to do some sort of Oracle that tracks on-chain volatility and automatically adjusts the fee based on that.

And that's an interesting experiment we've wanted to run for a long time, but we didn't want to hard code it into V3 because it was unclear if that was the optimal design.

And so with Uniswap V4, people can experiment with a whole different world of fee implementations, volatility-based, you could imagine DAO-controlled, et cetera.

I think that's a hook that will probably get a lot of usage.

Other pretty major features that you can add onto a pool, we have an implementation of a limit order hook, which allows you to place limit orders at ticks.

So right now, you can kind of simulate limit orders a little bit in Uniswap v3 by providing liquidity to very narrow ranges and withdrawing your liquidity after it's filled.

But with Uniswap v4, you could actually just create straight up limit orders that execute at, you know, basically, maybe to step back quickly, hooks are basically code that run at certain points in like the life cycle of a pool and a transaction.

So you could imagine there's a hook that runs at the beginning of every swap.

At the moment of pool creation, run this code.

Before anyone removes liquidity, run this code.

And so the hook for a fee might be like code that runs before every swap or after every swap.

Limit orders might be, would also be code that runs during the swap transaction.

See all Bankless transcripts on Applepodcasts

Announcing Uniswap V4 With Hayden Adams