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Daniel - Bountycaster
@pirosb3
New bounty: The most resourceful thread on @uniswap V4 Pools I'm pretty excited about Uniswap's architecture and hooks, which enable unprecedented customizability for liquidity pools. I'm looking for a comprehensive thread (a reply to this post) that dives deep into the following aspects of Uniswap V4 hooks: Existing Hooks: - Which hooks are currently available to try? what use cases do they solve? please only share hooks that are verified Potential Hooks & Innovation: - what creative ideas could leverage V4's hook system? - what interesting applications could integrate with Farcaster? Reward: 20 USDC Only high-quality replies will be rewarded, judged solely by me @bountybot NOTE: I do not take any responsibility for the content shared! DYOR
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Allyson pfp
Allyson
@allyson
Sure! Here's a detailed thread that covers the different aspects of Uniswap V4 hooks, starting with existing ones, followed by potential ideas and creative uses. #Uniswap V4 Hooks: A Deep Dive 🧵 1/ What are Hooks in Uniswap V4? Uniswap V4 introduces a more flexible system for smart contract interactions
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Allyson
@allyson
called *hooks*. These allow for custom logic to be inserted at various stages of liquidity pool interactions, such as swaps, liquidity adds/removals, and more. This opens up new possibilities for developers to build complex, personalized, and innovative DeFi strategies.
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Allyson pfp
Allyson
@allyson
2/ Existing Verified Hooks 🔧 Uniswap V4’s initial set of hooks includes a few verified hooks that are already available for use. Let’s take a look at some of them and the problems they solve: ##a) Swap Hook - Use Case: Allows for custom logic to be executed before or after a swap transaction takes place. - Example:
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Allyson
@allyson
Fee adjustments based on the size of the trade or the liquidity of the pair. - Why It’s Useful: Enables dynamic fees and other custom logic tied to the specific conditions of a swap. ##b) Liquidity Change Hook. - Use Case: Triggers when liquidity is added or removed from a pool. - Example: Automatically…
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Allyson pfp
Allyson
@allyson
…sending a portion of liquidity to another pool or protocol. - Why It’s Useful: Facilitates automated strategies that involve liquidity rebalancing or specific conditions for adding/removing liquidity. ## c) Rebalance Hook - Use Case: Used for rebalancing liquidity between two assets or pools.
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Allyson
@allyson
- Example: A strategy where liquidity is rebalanced based on certain market conditions (e.g., price volatility). - Why It’s Useful: Can help maintain optimal liquidity distribution and reduce impermanent loss by auto-adjusting positions based on real-time conditions. These hooks are only the starting point, but
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Allyson pfp
Allyson
@allyson
… they already unlock a lot of customization for developers working on more advanced DeFi strategies. ---
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Allyson pfp
Allyson
@allyson
3/ Potential Hooks & Creative Innovation 🚀 Now, let's look at some exciting potential uses of Uniswap V4's hook system, especially in a way that enhances interoperability with other decentralized applications or protocols. ##a) Arbitrage Hook - Use Case: Automatically triggers an arbitrage strategy when specific
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Allyson pfp
Allyson
@allyson
…price discrepancies occur between different pools. - Example: A hook could execute a transaction that takes advantage of price differences between two or more Uniswap pools, or even cross-chain arbitrage with other decentralized exchanges. - Why It’s Useful: Automated arbitrage opportunities could provide an additional layer of profit-making with minimal intervention.
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Allyson
@allyson
…additional layer of profit-making with minimal intervention. ##b) Custom Fee Distribution Hook - Use Case: Instead of a flat fee, the hook can adjust how fees are distributed between liquidity providers. - Example: Fees can be split dynamically based on factors like the duration liquidity has been staked, the size
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Allyson pfp
Allyson
@allyson
of the liquidity position, or even based on external market conditions (e.g., increased volatility). - Why It’s Useful: This allows for more sophisticated reward mechanisms, providing stronger incentives for liquidity providers to participate in pools that are beneficial to the ecosystem.
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Allyson
@allyson
##c) Transaction Monitoring & Custom Slippage Hook** - Use Case: A hook that monitors a swap or liquidity event, adjusting slippage tolerance or triggering specific actions when a transaction doesn't meet user-defined criteria. - Example: If the slippage exceeds a certain threshold, a hook can cancel the transaction
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Allyson
@allyson
or trigger a rebalancing of liquidity to reduce risk. - Why It’s Useful: Users can protect themselves from slippage during volatile market conditions, improving the overall experience and risk management. ##d) Dynamic Liquidity Provision Hook - Use Case: Changes liquidity provision dynamically based on external signals like
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Allyson pfp
Allyson
@allyson
…market sentiment (e.g., from Twitter, Farcaster, or news feeds). - Example: If a certain asset gets positive sentiment from Farcaster (or other data sources), liquidity can be increased in its respective pool automatically. - Why It’s Useful: Leverages social sentiment and decentralized data sources to make…
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Allyson
@allyson
liquidity provision more responsive to market trends. --- ## 4/ Interesting Applications for Farcaster Integration 📱 Farcaster, a decentralized social network, could be a game-changer when integrated with Uniswap V4 hooks. Here are a few ways they could work together: a) Sentiment-Driven Liquidity Adjustments-
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Allyson
@allyson
Use Case: Liquidity can be dynamically adjusted based on community sentiment derived from Farcaster posts. -Example: A custom hook could track mentions or sentiment of specific assets (e.g., $ETH, $UNI) on Farcaster. If positive sentiment spikes, liquidity providers could automatically add liquidity to the pools…
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Allyson
@allyson
…associated with those assets. - Why It’s Useful: This makes liquidity more responsive to the pulse of decentralized communities, adding a layer of social intelligence to DeFi. b) Socially Powered Fee Rebalancing- Use Case: Community-driven fee structures could be created by integrating Farcaster signals.
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Allyson
@allyson
Why It’s Useful: Enables decentralized communities to influence DeFi parameters directly, creating more engaged and incentivized user bases. c) Liquidity Mining Campaigns Linked to Social Engagement - Use Case: Liquidity providers could be rewarded based on social activity or engagement on Farcaster.
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Allyson
@allyson
- Why It’s Useful: Combines social media influence with DeFi incentives, adding an additional layer of reward for those who help promote and support protocols within decentralized communities.
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