Uniswap v4 - Cheaper Gas, Custom Hooks, Still Expensive

Uniswap v4 launched January 31, 2025 and it's actually pretty decent - for DeFi standards anyway. Gas is cheaper, you can bolt custom logic onto pools, and they finally figured out that deploying new contracts for every pool was fucking expensive. One contract for everything instead of thousands - way cheaper to operate.

Look, I've been using DEXs since DeFi summer 2020, and v4 finally fixes some genuinely annoying shit that's been bleeding our wallets dry. But let's be real - it's still Ethereum-based DeFi, so you're gonna pay through the nose when the network gets busy.

Interface looks the same: Uniswap v4's frontend is basically identical to v3 - they didn't waste time redesigning buttons when the real work was happening under the hood. The difference is in your wallet after pool creation.

Here's what actually got better:

One contract instead of thousands: Instead of deploying separate contracts for each pool (which cost $300-800 in gas in v3), v4 dumps everything into a single contract. Pool creation now costs $20-50. Still expensive, but not "holy shit I just bought a nice dinner" expensive.

Hooks are actually cool: This is where v4 gets interesting. Hooks let you attach custom smart contracts to pools. Want limit orders? Hook. Want dynamic fees based on volatility? Hook. Want to automatically compound LP rewards? Hook. Of course, most hooks are unaudited garbage that'll rug you faster than a shitcoin, but hey - that's DeFi baby!

Flash accounting sorcery: They use EIP-1153 transient storage to batch operations instead of doing expensive transfers for every trade. Think of it like running a tab instead of paying for each beer separately - way cheaper. This flash accounting mechanism eliminates intermediate state changes, as detailed in QuillAudits' swap mechanics analysis.

Native ETH finally works: No more wrapping ETH to WETH and paying double gas. Direct ETH trading costs about 50% less gas than ERC-20 swaps.

Adoption reality check

TVL hit like a billion pretty quick, but remember - DeFi TVL numbers are mostly fake. Half of it is wash trading and mercenary capital that disappears the moment yields drop. Still, people are using it because gas is actually cheaper.

Most volume happens on Layer 2s anyway because mainnet Ethereum is still expensive as hell. When the network gets busy, you'sre back to paying $50+ for swaps - v4 or not.

The Business Source License means you can't fork it until 2027. Want to build a competing DEX using v4's code? Too bad - you'll have to wait until the license expires or pay Uniswap Labs for permission. Classic "decentralized" protocol protecting centralized profits.

Want to build on v4? Here's what you need to know

Hook development isn't trivial: Start with the official hook tutorial and check the awesome hooks repository for examples. The Uniswap Foundation developer toolkit has funding opportunities if your hook doesn't suck.

Security is your problem: Read Hacken's analysis of hook vulnerabilities and CertiK's security considerations. Every hook is another attack vector.

MEV will fuck you regardless: Use Flashbots Protect for large trades or accept getting sandwiched. The MEV mitigation guide explains the basics, but bots are always one step ahead.

Impermanent loss calculators help: DailyDeFi's calculator and CoinGecko's tool show how much money providing liquidity will lose you. Spoiler: usually more than you expect.

Hooks: Cool concept, execution is hit-or-miss

Hooks are smart contracts that execute at specific points in a pool's lifecycle. Think of them as middleware that can modify how trades work. The concept is genuinely innovative - you can add custom logic without forking the entire protocol.

Where hooks can intercept your transaction:

• When pools get created (set custom parameters)
• Before/after someone adds or removes liquidity
• Before/after swaps (modify behavior, add fees)
• When donations happen (yes, people donate to pools apparently)

Hooks that don't completely suck:

• Limit orders: Finally, you can set "buy ETH at $3000" instead of market buying like a degenerate
• Dynamic fee hooks: Fees increase during high volatility (protects LPs from getting arbitraged to death)
• TWAMM hooks: Time-weighted average market maker for large orders that don't wreck the price
• Rebalancing hooks: Automatically compound LP fees back into positions

Hooks that will probably rug you:
Most of the 2,500+ hooks deployed are unaudited experiments by anon developers. That yield farming hook promising 500% APY? Yeah, that's gonna drain your wallet faster than you can say "exploit."

Hook Execution Points: Hooks can intercept transactions at 8 different points - before/after pool initialization, before/after liquidity changes, before/after swaps, and during donations. Each hook declares which points it wants to intercept through bit flags.

Flash Accounting Concept: Instead of moving tokens around constantly, v4 keeps a running tab and settles everything at the end. Way cheaper than executing transfers for every operation.

Gas optimization: Actually works (most of the time)

Flash Accounting: Instead of moving tokens around constantly, v4 keeps a running tab using EIP-1153 transient storage and settles everything at the end. Like running a bar tab instead of paying for each drink.

Singleton contract: All pools live in one massive contract instead of deploying thousands of separate ones. Pool creation is now a cheap state update instead of an expensive deployment. Saved me about $400 in gas fees already.

Multi-hop routing: Want to trade SHIB → USDC → ETH? v4 does it all in one transaction without intermediate transfers. No more paying gas for each hop like a pleb.

ERC-6909: The token standard nobody asked for but actually helps

ERC-6909 lets one contract manage multiple tokens. It's like ERC-1155 but for DeFi. Reduces gas costs because you're not calling different contracts for different tokens.

Translation: Cheaper gas for multi-token operations. Your wallet might not support it yet, but at least gas is cheaper.

Security: Better than most DeFi, which isn't saying much

They spent $2.35M on bug bounties and got nine different audits. The $15.5M bug bounty is still active if you want to hunt for exploits.

That said, most of the risk isn't in the core protocol - it's in the random hooks people are deploying. Every hook is another attack vector. More code = more ways to lose your money.

The licensing clusterfuck

v4 uses a Business Source License until mid-2027, then goes open source. Translation: You can build on top of v4, but you can't copy their code to compete directly. No more SushiSwap-style vampire attacks stealing their liquidity on day one.

Want to launch "PancakeSwap v4" or "TraderJoe v4" using Uniswap's exact code? Fuck off and wait until 2027. You'll have to build your own AMM from scratch or license the code from Uniswap Labs (good luck with that pricing).

Real-world performance (spoiler: mixed results)

When it works: Gas is legitimately cheaper. I've been creating small test pools for $25-30 instead of the $300+ it used to cost.

When it doesn't: Ethereum network congestion still fucks everything up. When gas prices spike to 100+ gwei, even "optimized" transactions become expensive. v4 can't fix Ethereum's fundamental scaling issues.

Hook failures I've seen:

• Dynamic fee hook got stuck at 1% during a flash crash (ouch for traders)
• Limit order hook failed to execute during high volatility (orders just sat there)
• Custom rebalancing hook drained fees to wrong address (developer mistake, user loss)

The core protocol is solid, but the hook ecosystem is the Wild West. Use established, audited hooks or you're gambling with your funds.

Resources that actually helped me not lose money

Hook development: Medium's hook walkthrough and SolidityDeveloper's integration guide explain the basics. Umbrella Research's RBAC hook series goes deeper.

Security research: Certora's audit findings and QuillAudits' vulnerability analysis show what can go wrong.

General DeFi security: Cyfrin's TradFi vulnerabilities analysis, Olympix's audit gap guide, and MixBytes' lending protocol vulnerabilities are required reading for anyone building in DeFi.