Aggregator Hooks Integrates External Liquidity into v4, What Is Uniswap Planning?

Original ｜Odaily Planet Daily

Author ｜Golem

On October 22, Uniswap v4 announced the launch of the aggregator Hooks feature, which allows external liquidity sources to be packaged into standard v4 pools. It currently supports seven external sources including Curve, Fluid, and PancakeSwap, covering the Ethereum mainnet, Base, and Robinhood Chain. The official statement claims that this has enabled Uniswap to cover over 90% of DEX activity on these chains.

The founder of Uniswap also stated that the logic of aggregators has been integrated into the Uniswap v4 hook, and with this integration, the Uniswap API and APP are undoubtedly the best aggregators on the market.

However, even after a week of launch, users' perception of the aggregator Hooks experience may not be deep. When users trade through Uniswap, the router automatically compares the prices of native pools and these packaged pools and selects the optimal path without requiring users to manually enable or authorize anything. For investors, what truly matters is that Uniswap will still charge transaction fees for trades through these packaged pools and use the fees for UNI token burns.

Uniswap v4 captures fees generated from liquidity it does not own through aggregator Hooks, strengthening the UNI burn mechanism, which also means Uniswap is moving towards becoming a "gateway for on-chain liquidity," shifting from providing liquidity to distributing liquidity.

From Competing for Liquidity to Competing for Control of Liquidity Routing

Uniswap is already the largest DEX on-chain, with total trading volume exceeding $10 trillion. However, in practical use, with the development of wallets and various on-chain liquidity aggregators, most users no longer interact directly with the Uniswap APP. Although Uniswap has been deeply integrated into countless wallets and aggregators, its position has not diminished, but the importance of Uniswap's front end has indeed decreased.

The Uniswap v4 aggregator Hooks is changing this situation, allowing users to gain deeper liquidity and better execution without changing their experience, which may help Uniswap's front end regain competitiveness in the market.

On one hand, as a provider of liquidity infrastructure, and on the other hand, aiming to become a liquidity gateway for routing trades, Uniswap is moving towards the model of Jupiter.

Jupiter is the most popular aggregator in the Solana ecosystem. According to DefiLlama data, Jupiter's cumulative routing trading volume has exceeded $1.3 trillion, with Solana's total DEX aggregator trading volume in the past 30 days being approximately $27.115 billion, of which Jupiter accounted for about $13.354 billion, nearly 49.3%, ranking first. Historically, Jupiter even monopolized over 90% of Solana's aggregator trading volume at one point.

Of course, Jupiter is not just an aggregator; its own DEX had a trading volume of about $2.24 billion in the past 30 days, and perpetual contract trading volume of about $4.01 billion. Jupiter aggregates the liquidity of the entire Solana ecosystem through routing while also operating its own products in trading and derivatives. The richer the liquidity provided by external protocols, the better the aggregator can execute trades for users; the more users are accustomed to entering the market through Jupiter, the more opportunities Jupiter's own products have to gain trading traffic.

Uniswap aims to replicate this logic in the EVM ecosystem, with the distinction that it has gained an advantage in liquidity supply first.

With the help of aggregator Hooks, Uniswap v4 directly incorporates the liquidity of external protocols into its trading path, allowing users to stay within the Uniswap APP. If aggregator Hooks can continuously improve pricing and execution experience, then in the future, Uniswap has the opportunity to master both liquidity supply and trading traffic distribution.

Can UNI's Value Capture Ability Really Be Enhanced?

The aggregator Hooks of Uniswap v4 may not necessarily be a bad thing for other DEXs providing liquidity; it resembles a win-win situation, as they can use Uniswap as an effective distribution channel and still profit from user trades, while Uniswap can complete the transition from providing liquidity infrastructure to becoming a "routing layer."

However, the short-term impact of Uniswap v4's aggregator Hooks on enhancing UNI's value capture ability may be limited.

Uniswap v4's aggregator Hooks has only been online for a week, and neither the official nor third-party data platforms have separately monitored the trading volume routed through aggregator Hooks, making it difficult to calculate how much trading volume has been routed and how much revenue has been generated. However, the data collected by crypto blogger @0xtunad at the launch of Uniswap v4's aggregator Hooks is somewhat valuable for reference.

It was found that Uniswap v4's aggregator Hooks completed its first trade as early as April this year, and by October 22, before the release, it had completed 88,101 transactions across three chains, with a total trading volume of $2.85 billion, but 85% of this came from Sky's LitePSM, which is the exchange between USDC and USDS, and Uniswap charged $0 in fees.

This led to the situation where, although Uniswap v4's aggregator Hooks routed billions of dollars in trading volume over the past six months, the fees collected were only $2,059 (with a fee rate of 0.01% to 0.10% of the trading volume), and all these funds were directed into Uniswap's TokenJar contract.

The reason Uniswap does not charge fees on Sky's liquidity pool is likely due to joint testing, as the official announcement of the formal launch date was October 22. But this raises a key question: whether Uniswap v4's aggregator Hooks can enhance UNI's value capture ability depends on whether it will open the fee switch for external high-traffic pools.

The protocol fees charged by aggregator Hooks are ultimately borne by users and are unrelated to other platforms being aggregated. For some low-depth, low-traffic pools, users may be willing to pay extra for convenience, but for high-traffic pools, fee-sensitive users will not easily accept it, and this group of users happens to be the most frequent traders.

Therefore, if Uniswap wants to attract this group of users, it may not open the fee switch for high-traffic pools in the early stages of aggregator Hooks, which means that the actual impact on UNI's value capture ability in the short term will be limited.