Since Uniswap v4 was announced this Summer, the Uniswap Foundation has been focused on cultivating ecosystem growth and developing a robust capital allocation strategy to foster adoption of v4. On the community side, the Foundation has hosted spaces for devs, ran two hackathons (catch us in Istanbul for number three!), hosted an event with 20+ delegates to explore the potential of hooks, created and moderated a telegram group with 300+ active hook devs. Regarding grants, we announced a wave of v4 grants and awarded 7 grant recipients with $218,000 in funding just for v4 (announcement thread coming soon!). In terms of developer resources, we’ve released v4 documentation, launched a testnet, and are working with three developer ambassadors who have built amazing tools for the ecosystem. As you can tell, we’ve been busy! And this is just the beginning.

As stewards of the Uniswap ecosystem, the Foundation is here to empower developers and usher the community into a new chapter in the Uniswap tale. As such, our approach to promoting the hook ecosystem is methodical and phased.

Hooks Product Strategy Goals

Hooks are more than just a feature— they’re the heart of Uniswap’s next chapter. While the success of v4 hinges on various factors, the pivotal role of hooks cannot be understated. As we strive to cultivate v4 as a platform for liquidity innovation, the Foundation’s strategic focus around hooks aligns with our foundational growth aspirations:

1. Facilitate Seamless Migration of liquidity to v4: The Foundation will ensure a compelling array of pools and hooks in v4 after launch and in the months following to encourage a smooth migration of TVL from v3.

2. Catalyze Growth: We aim to drive Uniswap Protocol’s liquidity and swap volume by leveraging the potential of hooks. Our horizon is vast, whether enticing liquidity and swap volume from elsewhere in the DeFi landscape or unlocking net-new use cases that introduce fresh possibilities to AMMs.

3. Build a DeFi Innovation Hub: To make Uniswap v4 a universal liquidity protocol, we aim to harness and incorporate the most innovative hook practices emerging within the landscape into v4.

While each of these three goals stands distinct, they are inextricably linked. By boosting v4's appeal over v3 through innovative hooks, we amplify its intrinsic value and position it strongly against other AMMs. Every initiative the Foundation takes regarding hooks traces back to these foundational objectives. As our journey unfolds, we'll continuously adapt, ensuring our endeavors directly contribute to these milestones, refining our approach based on the outcomes achieved.

Hooks mark Uniswap v4’s departure from its predecessors and many existing DeFi protocols as it transforms from an application protocol to a true platform protocol. The Foundation will focus on nurturing the ecosystem that develops around the platform, providing grant funding to individuals and teams building infrastructure and applications.

How the Uniswap Foundation Supports the Hook Ecosystem

Whereas developers building on top of Uniswap were mostly additive in the past, developers building on v4 will be multiplicative to its value. The breadth of use cases expressed via v4 hooks means that the Uniswap protocol advances in all directions in DeFi.

Building an ecosystem is like building a fire. Our grant initiatives concentrate on several pivotal strategic imperatives, which serve as the vital "kindling" for the hooks ecosystem:

1. Championing Hook Development: As we witness a surge in interest and hacking on hooks, our role is to bolster this emerging developer community, ensuring its progression from experimental endeavors to established best practices through robust documentation and developer events around the world (EthNYC, EthCC in Paris, and soon at DevConnect).

2. Optimizing LP Profitability: There are multiple potential ways that LP profitability can be increased. Hooks could redirect MEV to LPs and swappers; others can help mitigate it by constraining what is possible in the pool. Our strategy remains inclusive, embracing varied approaches to solving LP profitability. We’re facilitating research working groups and engaging in long-term partnerships with researchers exploring ways of mitigating, capturing, or redistributing LVR/MEV for both LPs and swappers with hooks. We’ve funded a grant creating Proof of Concept Hooks that can be repurposed by protocols that want to incorporate MEV capture into their workflow. Notably, one of the initial POCs we sponsor delves into dynamic fees, an aspect of the larger design spectrum aimed at alleviating or mitigating LVR/MEV issues. Our core objective here remains to foster developer education.

3. Accelerating the hook discovery and routing stack: The vastness of the hook landscape necessitates robust discovery and routing mechanisms. RFQ systems like Uniswap X and aggregators like 0x, 1inch, and Paraswap will likely play a major role. The Foundation recently selected three security firms to receive a “Bad Hooks Research” grant. In the coming months, we will provide grants for infrastructure and tools that enhance the efficiency, safety, and overall value of routing to DEX pools (especially v4 pools) for routers, aggregators, solvers, and all participants navigating Hookspace.

4. Fostering Protocols Built on Hooks: Our DevRel team is deeply engaged with the development community, collaborating with over 24 projects focused on what we term 'hook applications' or hApps. These groundbreaking projects span many functionalities, such as ALMs reconfiguring vault logic via hooks, virtual DEXs implementing specific hook functionalities, specialized lending protocols, custom oracles, and liquidity mining hooks. These represent the deepest opportunities for v4 to become a universal liquidity infrastructure across DeFi.

5. Facilitating Institutional Engagement: The adaptability offered by hooks holds the potential to revolutionize institutional participation in DeFi. By eliminating traditional hurdles, we envision a smoother onramp for institutions to develop and build in the space. Two grant recipients conducted research on barriers to institutional capital. This quarter, we are funding implementations of some of the solutions recommended in the first document as hooks. For instance, KYC hooks can streamline the verification process, ensuring compliance with regulatory standards while minimizing friction.

A Look Ahead: Roadmap for Hooks-Related Grants

Here's a breakdown of our approach, tied to four key milestones.

• Milestone 1, June-December: Open Source.

• Milestone 2, January-February: Code Freeze, initiated after EIP1153 is incorporated when the code is audited.

• Milestone 3, Q1 ‘24: V4 Deployed

• Milestone 4, Q2 ‘24 and beyond: V4 Adoption

* timelines are estimates based on Dencun and Audit timelines

Milestone 1: Laying the Groundwork (Currently in Progress)

• Grants: We are awarding several grants during this phase (the winners for our first set of RFPs, listed here, will be announced soon).

  • Some of these grants are allocated to teams working on proof-of-concept hooks and the associated educational documentation.

  • The rest are centered on research efforts, primarily delving into these hook’s security and risk dimensions.

• Engaging the Developer Community: Our approach to building a strong community involves initiating online and offline hackathons targeted at POC hooks – you can see many of the hooks that have already been built due to our efforts here (this UniswapHooks site was built by a UF Developer Ambassador!). We also offer bounties to incentivize developers and align with our primary objectives.

Milestone 2+3: Paving the Way for v4 Launch

• Outcome-Based Grants for Production Hooks: For detailed proposals geared toward hooks that will be important for the protocol to have at launch. These proposals should resonate with our overarching strategy and address areas that might otherwise lack funding from for-profit projects.

  • Potential Categories (under consideration):

    • LVR reduction, internalization, or redistribution

    • Boosting LP profits and overall yields

    • Innovating passive liquidity pool models

    • Establishing pools/swaps tailored for institutional requirements

• Support Additional Infrastructure for Hooks Ecosystem (under consideration): We will continue to iterate on our documentation and tooling based on community feedback and invest in additional pieces of tooling and infrastructure for the v4 ecosystem:

  • Formulation of hook list standards

  • Development of explorers for hook lists and pools

  • Production-ready hook FOSS building block code library for simple use cases

  • Additional hook security research and tooling

  • Advanced POCs for more complex hooks

Milestone 4: Adapting Post v4 Launch

Our strategy becomes more dynamic as we transition into the post-launch phase of v4. The environment post-launch will dictate our approach, primarily based on user experience, liquidity dynamics, volume, and the evolving routing framework. We plan to be adaptive and adjust our strategy as needed.

• Hook Security & Development: There are multiple avenues hooks could take:

  • LPs might be able to produce hooks using a mixture of previously audited hook logic. Security implications of this approach remain undetermined. Alternatively, hooks could be more tailored and purpose-built by specialized teams, presented to the market as full-fledged hook contracts.

  • Investigating grants and studies for advanced hook development, including creating pre-built libraries filled with audited hook code.

  • Using coprocessor architectures, advancing automated integrations of verified safe hooks, and enhancing gas efficiency.

• Driving Adoption:

  • For 2024, Uniswap Foundation has earmarked up to $9M in funding for incentives programs. This capital might be best used to support a migration from V3 to V4.

  • As we observe the evolution of the hook ecosystem, we could fund larger, more intricate protocols and hook applications in line with v4 requirements.

Our approach to crafting the roadmap for hooks sees them not just as a feature to v4, but as a catalyst for liquidity innovation. As the v4 narrative unfolds, each effort, whether boosting hook development, improving LP profitability, or easing institutional engagement, is driven by a singular goal – empowerment of the developer community.

By dismantling the barriers of protocol rigidity and fostering a realm of tailored logic within pools, Uniswap v4 is poised to let the developer ecosystem push the boundaries of onchain liquidity. As stewards of this vibrant ecosystem, we are not just navigating unchartered waters but actively shaping the currents and tides that will drive the community towards a horizon brimming with possibilities.

Get started with our alpha v4 docs and create the unprecedented.

As we mentioned in the governance proposal to create the Foundation, we see an opportunity to elevate the Uniswap Grants Program (UGP) to have an even greater impact on the ecosystem than it already has. With this first set of grants, we are excited to showcase a few examples of this impact in action.

This first wave of grants sums up to ~$1.8M total, awarded across 14 grants. Some grants were awarded a few months ago and are already completed, while others were approved more recently after the creation of the UF. They vary in size and scope, and are spread across three categories:

1. Protocol Growth, including a decentralized volatility oracle, and a data analysis tool that extracts data from the Uniswap subgraph into a CSV file

2. Community Growth, including a Uniswap v3 development course and events in Latin America, Africa, and Canada

3. Governance Stewardship, including a deep dive into the state of Uniswap delegation, which will be translated into a series of recommendations to improve governance

One particularly exciting grant we want to highlight is Uniswap Diamond, which will be built by GFX Labs.

Diamond is one of the most ambitious initiatives ever to be funded by Uniswap Grants. This work will benefit all ecosystem stakeholders - enhancing the pro trader and LP experience, increasing market share, and easing development and on-chain data analysis. It will include an API and SDK for historical and real-time on-chain data, which will change the game for developers building on top of Uniswap, analysts, and end users. Diamond also includes a pro interface designed to increase Uniswap’s market share amongst pro users accustomed to the features and comforts of a more traditional centralized exchange.

We’re particularly excited about this grant because it represents the kind of ambitious, high-impact, long-term-oriented work that the newly created Foundation is uniquely able to support. We are also thrilled to build a stronger tie between GFX Labs - a talented development team which has already shown a strong commitment to Uniswap - and the ecosystem as a whole.

Protocol Growth

Uniswap Diamond

Uniswap has achieved market dominance in the DEX space but only has ~1% of all crypto trading market share. Uniswap Diamond aims to grow that share by competing directly with the leading centralized exchanges in user experience and data. Traders will enjoy many of the helpful and familiar features of an off-chain exchange while maintaining the benefits of being decentralized and on-chain. In addition, the data layer being built to support Diamond will be totally open source, available for all developers and analysts to use.

Recipient: GFX Labs. GFX Labs was founded in 2021 by Getty Hill and Eddy Lee, who had previously worked as a professional crypto trader and developer, respectively, at Grapefruit Trading for several years prior. The team has shown a strong and sustained commitment to the Uniswap community and ecosystem, having proposed 6 of 14 successful Uniswap governance proposals and contributed as an active delegate.

Uniswap Diamond: Open Source API & SDK

This grant includes:

1. An API allowing users to fetch live and historical data streams of pool, token, and position information, as well as statistics such as liquidity, market depth, fees, etc

2. An SDK will allow users to easily integrate the API

3. Robust documentation for the API and SDK

4. A requirement to confirm ease of use, robustness, and functionality completeness from third party analysts and teams familiar with Uniswap on-chain data

Grant size: $808,725, across 3 disbursements

Intended impact: A core piece of infrastructure to developers and data analysts within the ecosystem, making it easy to incorporate real-time and historical Uniswap v3 data into integrations, applications, and analyses.

Uniswap Diamond: Pro Interface

This grant includes the following:

1. An Analytics Interface leveraging the Open Source API & SDK

2. A Pro Trading interface replicating the creature comforts of a centralized exchange, including market and limit orders, and LP tooling

Grant size: $820,800, across 4 disbursements

Impact: Filling in a gap in the Uniswap ecosystem, providing an interface catering to professional and active traders and LPs who are accustomed to the features available in a centralized exchange.

Decentralized Volatility Oracle

This grant will fund the development of a decentralized oracle that calculates the price volatility of tokens in Uniswap v3. The deliverables for this grant will include the development of smart contracts to calculate and store token price volatility, in turn allowing users to develop strategies to hedge their LP positions.

• Grant Size: $50,000, across 4 disbursements

• Impact: Currently, users either have to independently calculate volatility or use 3rd party oracle projects (i.e. Chainlink). This new oracle will allow for faster development and more efficiency as it creates a single place where everyone, including multiple projects at once, can collect historical volatility data from.

• Recipient: Ankit Chiplunkar. Ankit is a Senior Smart Contract engineer at Coinbase, and has a PhD in applied machine learning. He will be working on the oracle with Jing Fan, who previously worked as EM for integrating DeFi and Staking at Coinbase.

Uniswap.fish (previously Uniswap Calculator)

Uniswap.fish (previously Uniswap Calculator) is already a popular tool used by the Uniswap community that allows liquidity providers to discover, analyze, manage, and track their LP positions. The tool has already helped over 13,000 Liquidity Providers from over 130 countries define their Uniswap V3 LP strategies. This new grant will add new functionality to the existing tool, including an impermanent loss calculator, integration with the Celo chain, and a pool/position discovery feature.

• Grant Size: $25,000, across 3 disbursements

• Impact: Provides liquidity providers with a comprehensive and extended tool kit, helping them to optimize their liquidity provisioning strategies.

• Recipient: Chun Rapeepat, a Bangkok-based full-time indie hacker who built Uniswap.fish. The grant will allow the tool to further assist LPs in optimizing their strategies by allowing them to easily compare the behavior and profitability of different pools.

Uniswap data extraction tool

This tool would allow users to extract on-chain Uniswap data from the Uniswap subgraph and export it directly into CSV. The data available will include data per pool, token, transaction, and for the Protocol as a whole.

• Grant Size: $20,000, across 2 disbursements

• Impact: Today, the ability to collect and manipulate on-chain data are two of the most common roadblocks to conducting comprehensive analysis and research on Uniswap. This tool will make it easier for anyone to extract, manipulate, and analyze historical on-chain Uniswap data.

• Recipient: Shippooor team, a team which has built custom analytics and data visualization tools for DAOs. The team has previously completed multiple Uniswap Community Analytics program bounties (their Dune dashboards can be found here). The team has previously built a similar subgraph to CSV tool for Notional, here.

Numoen

Numoen aims to design and implement a constant function market maker with a logarithmic invariant - an idea initially proposed in this Replicating Monotonic Payoff paper published by Tarun Chitra, Alex Evans, and Guillermo Angeris. In theory this can be used to offer a more desired payoff for liquidity providers. By lending out the LP share of a LMM, the convexity mimics a power perpetual. This would potentially enable LPs to hedge against impermanent loss on any underlying asset.

• Grant Size: $5,000

• Impact: Expanding the universe of research and development related to AMMs, particularly related to enhancing LP experience, and keeping that work centered within the Uniswap ecosystem.

• Recipient: Robert Leifke and his team of fellow students. Together they have already created a very successful AMM implementation, Mobius. Numoen also recently posted a fascinating Twitter thread on Replicating Market Makers.

Community Growth

Uniswap v3 Development Course

A free educational course that will teach developers the technicalities of Uniswap v3 and provide guidance on how to build it from scratch. This course will build off of similar courses that this grantee previously built for Uniswap v1 and v2, which can be found here. [You can check it out in draft form here - though note it is still undergoing final review!]

• Grant Size: $20,000, across 2 disbursements

• Impact: The final goal is to create a free and open-sourced educational resource that will not only attract new developers to the Uniswap ecosystem but help developers make a seamless transition from web2 to web3 development as well.

• Recipient: Ivan Kuznetsov. Ivan has been a long-time contributor in the Uniswap ecosystem, having built similar courses for Uniswap v1 and v2.

DeFi LATAM

The DeFi LATAM community is one of the most active crypto communities in the LATAM region. Through a series of events, workshops, and gatherings they aim to educate the local community about the DeFi technology and cryptocurrencies.

• Grant Size: $15,000, across 2 disbursements

• Impact:The Uniswap Foundation is excited to educate new groups about DeFi and Uniswap, and we believe that the presence and promotion of strong, local sub-communities like DeFi LATAM is a perfect way to work towards that goal.

• Recipient: DeFi LATAM, a group of long term crypto enthusiasts on a mission to share their enthusiasm about DeFi and web3.

DeFi Africa

Sponsorship of the Ghana Crypto and DeFi Summit 2022. This conference is the first “organic, inclusive, and grassroots DeFi summit” to happen in Ghana, Africa.

• Grant Size: $5,000

• Impact: Educate builders and tech communities in Ghana about Uniswap and DeFi. As mentioned above for DeFi LATAM, the UF aims to educate new groups about DeFi, and we believe that supporting local, organic communities will help us achieve that goal.

• Recipient: DeFi Africa. This team and the Ghana Crypto and DeFi Summit have earned recognition broadly throughout the DeFi community, and is also supported by Maker, Balancer, Aave, and the Ethereum Foundation’s Ecosystem Support Program.

Phi

Support for the creation of Uniswap specific in-game assets and quests in the Phi Metaverse.

Phi visualizes on-chain identity and creates an open and inclusive metaverse land system that is based on universal web3 building blocks, such as ENS domains and wallet activity. Their work, already completed, has already prompted more than 30,000 swaps on Uniswap!

Phi’s ultimate mission is to onboard a new audience to Web3 through amazing pixel art and gaming experience.

• Grant Size: $2,000

• Impact: As Phi’s mission is to attract new users to web3 through a sophisticated gaming experience with absorbing pixel art, Uniswap specific assets, quests, and activities will spread Uniswap brand awareness, onboard new users, and increase community participation.

• Recipient: Shugo Tsuji

Ignition Hacks 2022

Sponsorship of the virtual hackathon Ignition Hacks, which is put on by a group of Canadian high school students. This event aims to introduce its participants to a series of cutting edge technologies including web3. Uniswap’s sponsorship allowed Ignition Hacks to host a web3 specific track.

• Grant Size: $1,000

• Impact: Expose Uniswap and web3 development to Canadian high school talent. Talent in web3 still has much room to grow and introducing web3 development concepts at an early age will strengthen and expand the talent pool, bettering the overall web3 and Uniswap ecosystem.

• Recipient: Ignition Hacks. The core team has previous experience with ETHGlobal Hackathons, and a partnership with Kevin Jones and the CryptoMastery team will properly introduce blockchain development to participants.

Governance Stewardship

Holdim

The Holdim team is building a mobile-first app that will allow users to keep up with the latest governance updates across multiple protocols. The app will allow users to connect and interact with multiple governance forums at once, and include a Snapshot integration to participate in off-chain voting as well.

• Grant Size: $15,000, across 3 disbursements

• Impact:  Many people are interested in participating in protocol governance, but it can be difficult to follow every protocol governance forum separately. We believe having a mobile app of all governance activity will increase governance awareness and participation across DAOs, including Uniswap.

• Recipient: Holdim, a decentralized team of crypto enthusiasts based in Europe.

Governance Decentralization Benchmarks and Tracker

This grant’s work included:

1. A Uniswap governance dashboard measuring governance vote decentralization including comparisons to other DeFi protocols

2. An Analysis of Uniswap Delegation

3. An Analysis of On- and Off-chain Voting Metrics

The dashboard will be updated regularly, on a cadence to be discussed with others in the Uniswap community.

• Grant size: $7,500, across 2 disbursements

• Impact: Provides nuanced governance decentralization data to the Uniswap community. This data can be used as a benchmark for future initiatives intended to drive additional decentralization and increase awareness within the Uniswap Community about governance participation.

• Recipient: Taylor Plumer and Hunter Plumer, who each have professional experience in data analysis and building business intelligence dashboards. They previously created an on-chain governance Dashboard for the UGP Community Analytics Bounty #4, which you can see here. In addition to this grant, they will be writing periodic updates to their findings as they look to contribute long term.

Recognized Delegation Program Research and Development

This initiative will deep dive into Uniswap’s current delegation program, providing a thorough analysis of its current state, as well as a set of recommendations focused on how it could be improved. These write-ups will be shared in a comprehensive report for the community.

• Grant size: $16,000, across 4 disbursements

• Impact: This research will help guide the evolution of Uniswap governance, particularly delegation, in the right direction.

• Recipient: Penn Blockchain. Penn Blockchain is one of the largest web3 student organizations in the country. They are active governance participants and delegates in many DeFi protocols, including Uniswap. This research opportunity will allow them to leverage their experiences in governance and explore the state of Uniswap’s delegation system, creating a comprehensive research report that gives the community clarity on what might be the best next steps for Uniswap governance.