Original source: 0xTodd
Recently, I deposited some money in Uniswap V4, so I seriously studied the hooks of Uni. Many people have privately told me that after Uni launched V4, they did not feel the same sense of amazement as when V3 was launched. The main reason is that the concept of "hook" itself is too abstract and needs to be directly held accountable.
Rather than being directly translated as "hook," I personally think it would be better to interpret it as a "plugin." The hook itself is meant to add some functionalities to the pool that go beyond Uni itself. Its documentation emphasizes at length when hooks can be called, but most people do not care about that; it would be better to explain what hooks can actually do.
【Examples of Hook Uses】
-- For example, it can allow the pool you create, such as ETH-USDT, to be used only by certain specific addresses;
-- Or, it can enable your pool to charge higher fees during busy times and lower fees during idle times;
-- Furthermore, it can even allow your pool to operate without the X*Y=K curve (PS: probably inspired by Curve at the time).
In summary, you can freely develop various functionalities that you need, which Uni's official team may never release.
It's somewhat like the Creative Workshop on Steam, where the official team has stopped developing, allowing others to create freely.
Another change is that in the past, there were only two profitable niches on Uni: LPs and traders, and both were essentially taking from each other's pockets. After V4, with the introduction of hooks, it actually allows some script developers to also have profitable niches.
You write a hook, and others can pay to use your hook when they create a pool (selling… hooks?). Each pool can use one hook plugin, but one set of hook plugins can be subscribed to by countless pools, with a very low marginal cost. There is a website called Hook Rank that lists hundreds of hooks, showing how much money various hooks have earned. Currently, one of the most commonly used hooks, Flaunch, has reportedly earned its developer over $1 million.
What does it do? Using its hook, you can create a pool for a meme coin and direct a certain percentage of the pool's fees, for example, 80%, to your own wallet, while 20% is used for buybacks.
Fortunately, when Trump's son launched $Trump, he didn't know about this feature; otherwise, wouldn't he have directed all fees to future world finance?
Additionally, as the saying goes, only competitors understand you best. Later, Pancake also decisively introduced hooks, but instead of calling it V4, they named it Pancake Infinity. Of course, that's another story for another time. In summary, hooks are quite an interesting thing, worthy of the name V4.
Here's another example of a hook's practical use.
Since Pancake also launched Infinity (which is V4), hooks on the BSC chain have started to develop. For example, the Brevis hook surprisingly created a VIP account effect on-chain: long-term holders of $CAKE, when trading in the CAKE-BNB pool with this hook, pay lower fees than others; similarly, large on-chain traders with higher transaction volumes can also enjoy lower fees.
It is speculated that this hook triggers once before the transaction, allowing special accounts to correspond to special fee rates. It successfully implements this familiar business model without changing Pancake's underlying structure, using a third-party smart contract, which is indeed quite innovative.
Moreover, considering that each pool can usually only have one hook, this pool is likely to become one of Pancake's designated pools in the future.
Brevis is primarily focused on ZK and is part of YZI Labs' portfolio. It has been mentioned that working on ZK is currently one of the most challenging tasks in the industry, so now that they are personally getting involved in creating a hook, it is naturally not a difficult task.
Furthermore, if they can later strongly bind with Pancake and launch various hook functionalities, Pancake as a DEX might end up having more trading features than Binance's main site. And Brevis, by promoting various hooks, could become a key contributor in the Pancake Infinity era.
Looking forward to the new era of hooks.
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