Uniswap: Everything you need to know about V4, Unichain, and more
How V4 Hooks and Unichain Position Uniswap for the Next Phase of DeFi Infrastructure"
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Uniswap stands as DeFi's flagship protocol, being both the largest decentralized exchange (DEX) and one of the first platforms for users to buy tokens on-chain. Since its launch in 2018, the protocol has processed over $2.36 trillion in trading volume, has over 25 million unique addresses, with almost half a billion trades.
Today it commands approximately 37% of the total DEX market share, with daily active users consistently around 70 thousand, and is deployed on 12 networks including Ethereum, Arbitrum, Optimism, and Base.
Founded by Hayden Adams, Uniswap received substantial backing from leading venture capital firms including Paradigm, Andreessen Horowitz, Polychain Capital, and more:
Seed Round (2019): $1.8M led by Paradigm
Series A (2020): $11M led by Andreessen Horowitz
Series B (2021): $165M led by Polychain Capital, valuing the company at $1.66B
The team has consistently demonstrated its ability to execute, with each version of the protocol introducing features that become industry standards.
When V1 launched in 2018, it featured the groundbreaking concept of AMM using the constant product formula (x * y = k), enabling permissionless token swaps without traditional order books. In 2020, V2 added any-to-any token liquidity pools and swaps, flash swaps, and price oracles. In 2021, V3 launched concentrated liquidity, allowing liquidity providers to focus their capital within specific price ranges for greater capital efficiency.
V3 has generated over $2.4 billion in fees for liquidity providers since launch. Notably, the protocol itself has not taken any cut of these fees - all revenue has gone to liquidity providers. The protocol has the ability to enable up to a 10% protocol fee on all trading volume through the "fee switch," which, based on current volumes, could generate substantial protocol revenue if activated by governance.
In October 2023, Uniswap Labs (the core development team driving protocol innovation) introduced a frontend fee where users interacting via its website UI will incur a fee of 0.25% (was increased to 0.25% from the initial 0.15%), generating over $83 million in fees.
Now, with V4, Uniswap is pushing the boundaries further by introducing a hooks system that enables customizable pool logic, enabling more possibilities to create sophisticated DeFi applications by builders. We will deep dive into V4 and especially hooks later in this article.
On 10 October 2024, Uniswap also launched Unichain on testnet, a Superchain L2 which aims to address key challenges in DeFi, promising significantly reduced gas fees and block times, unifying cross-chain liquidity, and more.
In this report, we will explore Uniswap's latest developments and their implications for the future of DeFi, covering the following key topics:
What is Uniswap v4: Singleton design, hooks and use cases, and more
What is special about Unichain?
Competitive Landscape
Investment considerations
Thesis