Illustrating Uniswap V4's 'Hooks': The Underestimated Killer Feature

Source: 0xTodd

Recently, I deposited some funds into Uniswap V4, so I took a deep dive into Uni's hooks. Many people have actually privately told me that after Uni released V4, they did not feel the same astonishment as when V3 was launched. This is mainly attributed to the abstract nature of the "hook" concept, which is difficult to grasp directly.

Instead of translating "hook" directly as 钩子 (hook), in my humble opinion, it might be better translated as "plugin." The hook itself is intended to add some functionality beyond Uni itself to the pool. Its documentation tirelessly emphasizes when the hook can be called, although most people are not interested in that; it would be more useful to explain what the hook can actually do.

【Examples of Hook Usage】

-- For example, it can restrict certain specific addresses from using the pool you create, such as the ETH-USDT pool;
-- Or, it can make your pool charge higher fees during busy times and lower fees during idle times;
-- Or, it can even allow your pool to operate without following the X*Y=K curve (P.S.: probably inspired by Curve at that time).

In conclusion, you can freely develop various functionalities that you need, functionalities that Uni's official team may never implement. It's somewhat like the Steam Workshop, where things are no longer done by the official team, allowing others to freely create. Another change is that before V4, the Uni ecosystem had only two profit positions: LPs and traders, with both profiting at the expense of the other. With hooks after V4, even some script kiddies now have a profit position. You can write a hook, and others can pay to use your hook when creating a pool (Sell... Hook... Line?). Each pool can use one hook plugin, but one set of hook plugins can be subscribed to by countless pools, with very low marginal costs. A website called Hook Rank has listed hundreds of hooks, showing how much money various hooks have earned. One of the most commonly used hooks currently is Flaunch; I see that developers have already earned over $1 million.

What is it for? With its hook, you can create a pool for a meme coin and set the pool's fees to any proportion you like, e.g., 80% directed to your own wallet and 20% used for buybacks.

Fortunately, when Trump's son tweeted $Trump, he was not aware of this feature, otherwise, he might have directed all fees to the future of world finance?

Furthermore, as the saying goes, only your competitors truly understand you. Following suit, Pancake also decisively introduced a hook, albeit not named V4 but referred to as Pancake Infinity. Of course, that's another story for another time.
Overall, hooks are still quite an interesting thing, worthy of being dubbed with the name V4.

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