Uniswap launches 'StablePair Hook' to help LPs capture more stablecoin trading value

Uniswap Labs, the team behind the decentralized exchange protocol, has launched "StablePair Hook," a new Uniswap v4 hook designed for stablecoin trading pairs such as USDC/USDT and USDC/USDG.

The launch targets one of the largest categories of onchain trading. Stablecoin-to-stablecoin swaps on Uniswap reached $43.4 billion in the second quarter, more than the next three onchain venues combined, Uniswap Labs said Thursday.

Stablecoin pairs usually trade at a fixed rate, such as 1:1 for two dollar-pegged tokens. If the price moves away from that level, traders or bots can profit by bringing it back to parity. Uniswap Labs said StablePair Hook lets liquidity providers keep more of that profit.

"StablePair Hook gives traders consistent, predictable quotes on every swap, and LPs a bigger share of the value they create," Uniswap Labs said.

How StablePair Hook works

StablePair Hook uses a dynamic fee in place of a fixed fee that changes based on how far the pool price moves from its reference price.

When the price stays close to the reference price, the hook adjusts the fee on each trade to maintain a fixed spread between buying and selling prices.

If the price moves outside that range, trades that push it further away pay no fee because they are already offering the pool a favorable price, Uniswap Labs said.

Trades that move the price back toward the reference price use a Dutch auction. The fee starts high and falls with each block until a trader accepts it. Uniswap Labs said this allows liquidity providers to keep more of the value from bringing the price back.

The first StablePair Hook pools are launching on Ethereum with USDC/USDG and USDC/USDT.

The hook can also be upgraded through Uniswap governance, allowing its fee system and other parameters to change without moving liquidity to new pools.

StablePair Hook is Uniswap Labs' latest v4 hook and its first upgradeable dynamic-fee hook, according to the company. It follows DualPool, which launched in July with Spark's $150 million stablecoin migration, and Permissioned Pools, designed with Superstate, Securitize and Dowgo for permissioned asset trading.

Hooks are a key feature of Uniswap v4. They let pools add custom rules, fees, and pricing logic instead of using a single standard model. More than $38 billion in swap volume has flowed through v4 hooks to date, including $32 billion this year, according to Uniswap Labs. More than 90,000 hooks have been initialized across 20 chains, Uniswap said.

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