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With the launch of Unichain mainnet, we’ve been excited to see more than 100 teams start building on the network. To galvanize the next generation of DeFi projects, we’re sharing a Request for Unichain Builders: the 10 ideas we believe will shape the future of onchain markets.
Over the past weeks, more than 100 projects have started building on Unichain. Unichain’s early developers will play a key role in defining the future of the onchain economy. Over the next year, the Uniswap Foundation is committed to resourcing Unichain builders at every level: through programs like the Uniswap Hook Incubator, Unichain Developer Grants, and the Uniswap Foundation Security Fund. And today, we’re extending a Request for Builders to begin exploring the ideas we believe will push the boundaries of DeFi.
Decentralized exchanges are permissionless, censorship-resistant, have lower fees and support a broader selection of assets than centralized exchanges. However, centralized exchanges have traditionally had a better overall user experience: faster onboarding for new to crypto users, real-time insight into market dynamics and a reduced need to manage lower level details such as gas pricing.
Unichain offers a step change improvement in transaction costs and latency, while Uniswap v4 allows for the creation of a wider variety of order types like limit orders, stop loss orders and TWAP-style orders directly onchain. We're excited to see a range of improvements and differentiating products—at the routing layer with curated hooked pools, with frontends designed for specific use cases or types of users, and with analytics tools and other products, like privacy preserving proofs—to help innovate specific aspects of the onchain swapping experience.
Stablecoins remain a cornerstone asset in DeFi as total supply crosses the $200B mark. Stablecoins don't just satisfy demand for exposure and yield; they facilitate liquidity flows to blockchains, and allow institutions and individuals to safely manage and grow their onchain exposure in crypto native assets.
A well known innovation in stablecoin liquidity is known as “stable pools”. These pools provide liquidity for two or more stablecoins and concentrate it around the expected exchange rate of 1 to mitigate slippage. But as we see more diverse stablecoin issuers ranging from traditional financial institutions to onchain innovators, liquidity provisioning has to evolve too.
With hooks, developers are able to customize price curves and fees to help liquidity providers provide liquidity more effectively for these types of assets. We are excited to see hook developers identify and implement even better architecture for stablecoin swapping. Beyond just improving liquidity concentration, pools can become aware of depeg events to mitigate systemic risks, implement features for regulatory compliance, incorporate multiple assets, include pool-native incentive programs and more.
Out of the $200B in stablecoin supply over $189B is circulating in just fiat-backed stablecoins. Tokenized treasuries grew from $770M to $4B in 2024. Tokenization in other categories like private credit, global bonds and commodities is also growing. Real World Assets bridge traditional financial assets with the transparency and ease of onchain operations. However, these assets often come with restrictions on transfers, issuance and reporting that issuers have to comply with.
Decentralized exchanges have traditionally relied on ERC20 transfers and, historically, were not able to support more complicated transfer requirements, like requiring a KYC step, which in turn has limited Real World Asset adoption in DeFi primitives like lending. As shown in this KYC hook example from Jongwon Park, these transfer requirements can be honored with Uniswap v4 hooks, allowing Real World Assets to be used in DeFi.
We expect issuers of Real World Assets to develop their own hooks, as well as rely on existing and new tools & templates to support robust compliance and adhere to relevant legal requirements. By deploying on Unichain, Real World Asset issuers can issue, bootstrap liquidity and innovate on a single chain without compromising availability in DeFi activity and cross-chain access.
Over $24B of crypto assets are now being restaked to provide economic security. Both staking and restaking provide attractive “native” yields for collateral (ETH) holders, but their users require access to liquidity to be able to exit their positions.
Liquid staking and restaking tokens (LSTs/LRTs) have a known exchange rate against the underlying collateral (e.g., ETH or Bitcoin-linked collateral). They can be used in “linear pools” which work just like stable pools but concentrate liquidity around the known exchange rate.
Uniswap v4 will support the implementation of linear pools, but that's only the first step. The possibility of withdrawals and slashing necessitates a deeper integration with each LST/LRT and may also pave the way for staking/restaking to be used as a yield source for idle liquidity.
Lending protocols allow borrowers to access over $47B in assets, but the most popular architectures depend on oracle price feeds and feature expensive liquidation fees. Dan Elitzer explained the merits of oracle-free protocols and how he expects lending protocols to become more independent primitives like Uniswap.
It's fitting that oracle-free lending protocols can now be developed on Uniswap as hooks. Samyak Jain highlighted one possible architecture that has user-configured liquidation thresholds, impermanent liquidations and no liquidation fee (instead replaced by a liquidation penalty rate). These types of lending markets can offer greater customization and improved capital efficiency to borrowers while reducing the need for active position monitoring.
While Uniswap's default x*y=k price curve has been flexible enough to support liquidity provision for most types of onchain assets, some markets need order books or custom liquidity pools. Hooks now allow developers to customize Uniswap v4 pools and build markets for new types of assets natively.
For example, Ciamac Moallemi and Dan Robinson's pm-AMM concept could be readily adopted to implement prediction markets as a Uniswap v4 hook. Other assets that can be built this way range from crypto-collateralized stablecoins to fractionalized NFTs. Being able to leverage Uniswap v4's liquidity infrastructure significantly reduces the barriers to entry for developers.
Over $600M in liquidity is currently actively managed by “Automated Liquidity Managementˮ (ALM) protocols many of which are built on Uniswap. These protocols help more users participate in liquidity provisioning without the need to actively adjust positions against market conditions.
Uniswap v4 brings new tools for ALM protocols. For example, automatic LP rehypothecation, utilizing idle liquidity in a lending market to provide additional yield, is now possible. This strategy previously required offchain keepers for rebalancing as prices change but now can be directly performed in response to price changes via swap hooks. We expect ALM strategies to become more sophisticated and efficient by utilizing swap hooks, dynamic fees and other v4 features.
An open question in onchain markets is the optimal fee level for liquidity providers. With Unichain, lower fees are better for swappers and attract more order flow. On the other hand, higher fees help mitigate loss to informed order flow, also known as loss-versus-rebalancing (LVR) and help maintain liquidity provider per-swap profitability.
Uniswap v4 allows individual hooks to control fees dynamically and use other mechanisms for LVR-mitigation. This has resulted in ideas like the Sandwich-Resistant AMM by Umbra Research and am-AMM by A. Adams et al. Ideas like these and others just scratch the surface but can be implemented for the benefit of liquidity providers on Unichain.
DAOs and protocol treasuries often don't have access to investment banks, but naturally need the same types of services. This includes designing issuance strategies, performing asset reallocations, ensuring optimal liquidity provision, ownership management, risk management and many others.
Treasury managers can now design their pools through hooks to help achieve these objectives. For example, hooks can support liquidity bootstrapping, protocol owned liquidity, rebalancing, allowing liquid tokens to be used in governance and many other needs.
Unisocks was a playful preview of what’s possible when consumer commerce is tightly integrated with liquidity. Consumer commerce is impacted by scarcity, bot sniping, auctions, authentication and reselling – concepts that are well understood in permissionless onchain markets. We’re excited by products that bring the best parts of DeFi to consumer finance applications like payments, e-commerce, insurance and others.
These areas are only a starting point; the next era of DeFi is yours to shape. If you’re ready to build on Unichain, you can access a full suite of resources through the Unichain Builder Toolkit, and apply for Unichain Developer Grants.
A special thanks to Peteris Erins and Uniswap Foundation team members Ken Ng, Brian Nistler, and Chirag Narang for contributing to this post.
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Disclosure
Unichain and Uniswap v4 enable a diverse variety of project development, and any of those projects might touch on different areas of laws or regulations in different forums. The Uniswap Foundation encourages compliance with all applicable laws and regulations, and it is incumbent upon builders to consult with legal counsel as appropriate to determine the legal requirements and restrictions (if any) for their projects.
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