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Uniswap: v2 → v3 (or v4)

Uniswap is a leading AMM protocol and a foundation of DeFi. However, AMMs are vulnerable to sandwich attacks. Uniswap v3 and v4 add features that can mitigate some of this risk.

v2: Simple constant‑product model​

Characteristics​

  • Constant‑product AMM: x * y = k.
  • All LPs participate under the same pool conditions.
  • Price moves according to reserve changes from swaps.

Weaknesses​

  • With transactions visible in the public mempool, attackers can easily run the frontrun → victim → backrun pattern.
  • Even with slippage limits, induced price moves can still force worse execution.

v3: Concentrated liquidity and custom ranges​

Improvements​

  • Concentrated liquidity: LPs choose price ranges, improving capital efficiency.
  • Multiple pools: different fee tiers and ranges coexist.

With respect to sandwiches​

  • Concentrating liquidity can make slippage large within a narrow band when price moves slightly.
  • Attackers can still observe victim flow and preempt it.
  • Complexity increased vs v2, but sandwiches are not solved by default.

v4: Hooks and customization​

Hooks​

  • v4 introduces “hooks,” extensibility points around swaps.
  • Inject custom logic before/after a swap.
  • Examples:
    • On‑chain order‑book‑like behavior
    • Dynamic fee setting
    • Additional transaction validations

Applying hooks to mitigate sandwiches​

  • Hooks can verify conditions/order and reduce attack surface.
  • For example, reject orders beyond specified slippage or combine with private order flow.
  • Hooks are optional; v4 does not disable sandwiches by default.

Migration challenges​

  • Many users and protocols still rely on v2 pools.
  • Reasons include:
    • v3+ liquidity management is more complex and costly.
    • Downstream protocols/aggregators depend on v2, slowing ecosystem migration.
    • v4 is early, and adoption will take time.
  • As a result, significant capital remains in v2 pools that are more vulnerable to attack.

Summary​

  • v2: simplest and most vulnerable to sandwiches.
  • v3: better capital efficiency, but attack surface remains.
  • v4: hooks enable designing more attack‑resistant DEXs, but not by default.

Uniswap’s evolution does not completely prevent sandwiches; instead it provides flexibility for designers and users to incorporate mitigations.