Oracles
Uniswap v3 introduced built-in oracles to get the price of a token pair. This meant that every trade was saving price information that could then be used to compute the time-weighted average price (TWAP) of the token pair. While this was a great feature, it added extra complexity that cost a lot of gas.
Uniswap v4 removed built-in oracles, so we would need some periphery contract to query the pool, save the data in that other contract, and then use it to get the price of the token pair. However, this approach requires the periphery contract to be called by some router or other contract, leaving the possibility of malicious actors manipulating calls or missing critical price updates.
Hooks can help us implement an internal pool oracle that is more efficient and gas-cheaper, while ensuring that it’s called in every single swap that goes through the pool.
Benefits of Hook-Based Oracles
- Gas Efficiency: No need for external contract calls
- Guaranteed Updates: Every swap automatically updates the oracle
- Security: No external manipulation possible
- Flexibility: Implement your own price calculation methods
WIP.