Developed with support from the Uniswap Foundation, the Predicate Institutional Hook enables regulated financial institutions to deploy compliant liquidity pools on Uniswap v4 through programmable policy enforcement.

To unlock institutional participation in DeFi, the Uniswap Foundation has committed a $325,000 grant to Predicate and Paxos to develop a new policy enforcement framework for Uniswap v4. This framework, powered by the Predicate Institutional Hook, allows regulated financial institutions to deploy compliant liquidity pools through programmable, onchain policy enforcement.

Moving institutional capital onchain requires meeting legal, regulatory, and operational requirements that permissionless protocols don’t natively support. A key blocker has been the absence of protocol-level risk controls.

The Predicate Institutional Hook addresses this gap, embedding programmable policies directly into Uniswap Protocol pools. This allows institutions to meet regulatory requirements while accessing onchain liquidity.

“Policy is going to be critical infrastructure to power the rails for regulated capital to come onchain. We believe blockchains will be the global financial settlement system - and to enable that, regulated and unregulated markets need to coexist on the same platforms.”

- Khushi Wadhwa, Head of Research and Strategy at Predicate

The Predicate Institutional Hook translates offchain compliance requirements into enforceable onchain rules. Institutions can define and manage policies around liquidity provisioning, swapping, and broader onchain behavior.

Features:

• Policy Enforcement: Smart contract-level rule execution verified by distributed operators

• Liquidity Management: Controls for who can supply liquidity to prevent fund commingling

• Swap Controls: Flow-of-funds verification, identity checks, and transaction limits

• Regulatory Compliance: Support for AML/CFT, sanctions screening, and geolocation restrictions

• Extensibility: Programmable policies using onchain and offchain data sources

Paxos International has deployed the first production use of the Predicate Institutional Hook to support its yield-bearing stablecoin, Lift Dollar (USDL). The integration combines:

• Predicate Institutional Hook: For AML/CFT and geolocation compliance

• Auto-Wrapping Hook: To handle USDL’s rebasing mechanism

Together, these hooks create a dual-layer architecture: a “ghost” pool interface for USDL swaps, and a “liquid” pool for actual wUSDL/USDC trading—delivering a seamless user experience while maintaining full compliance. Learn more.

The Predicate Institutional Hook framework is now available for regulated institutions looking to deploy compliant liquidity on Uniswap v4.

• For implementation support and policy configuration, contact the Predicate team.

• Documentation and integration guides are available for institutions with compliance concerns looking to come onchain