Uniswap is preparing to launch its next major upgrade, Uniswap version 4 (v4). Erin Koen, the governance lead at the Uniswap Foundation, explains that the release is slated for later this year, pending the successful completion of Ethereum's Cancun upgrade and a comprehensive security audit.
Uniswap, which made its debut back in 2018, is the largest decentralized exchange (DEX) on the market. Initially limited to Ethereum, it has now expanded to five more networks: Polygon, Celo, BNB Chain, Arbitrum, and Optimism. As of today, Uniswap’s total TVL is almost $4 billion. Two days ago, the platform celebrated a whopping 200 million swaps.
The new features
The v4 upgrade promises several enhancements. One of the standout features is the introduction of “hooks”. These smart contracts will offer users greater customization options in Uniswap's liquidity pools and enable unique methods like dynamic fees, on-chain limit orders, and customized on-chain oracles.
Another noteworthy change is the “flash accounting” system. Unlike the previous v3 model where assets were transferred in and out of pools with each swap, the new system will only transfer net balances. This clever adjustment is expected to significantly reduce fees. But here’s the catch: it relies on the implementation of the proposed EIP-1153 change in Ethereum’s protocol which will be implemented during the Cancun upgrade.
EIP-1153 introduces transient data storage in Ethereum, meaning the data is only stored during a transaction. This will reduce the amount of data stored on the blockchain and make transactions much cheaper. The update is set to be released alongside other changes in the next hard fork called Cancun later this year. Check out the full details of the upcoming changes here.
After the Cancun upgrade activation, Uniswap v4 will undergo a thorough audit. The whole process is estimated to take up to four months.