Uniswap Labs first revealed the idea of “hooks” in 2023, alongside the launch of Uniswap v4. Hooks are programmable extensions that enable developers to customize the behavior of liquidity pools. These pools live within a single contract and can influence actions, including swaps, deposits and withdrawals. Hooks have the potential to allow for advanced use cases like dynamic fee adjustments, risk management, and novel trading strategies, opening new possibilities in decentralized finance (DeFi).

In 2024, the Uniswap Foundation provided a grant to Atrium Academy to launch the Uniswap Hook Incubator, enabling developers to bring their hook ideas to life through a multi-month bootcamp culminating in the selection of a capstone project using any technologies and chain(s) of their choice. Many developers chose Arbitrum to build on, which set new records as the first L2 to reach $20B then $22B in monthly volume on Uniswap by December 2024, establishing itself as a premier network for building the future of DeFi. Recently introduced, Stylus — a unique technology built for Arbitrum that seamlessly integrates with Uniswap v4 — played a significant role in this preference. Stylus enables the creation of advanced hook use cases that were previously infeasible or economically unviable on other EVM-based L2s, by providing low-cost, complex on-chain computations and access to a rich ecosystem of Rust libraries. This expanded design space allowed the hook builders to leverage Stylus in their capstone projects to showcase the next generation of DeFi innovation.

Dynamic LP Assurance, DynamicShield, and ember were Uniswap Hook Incubator winning teams that designed their hooks using Stylus. Autopilot Hook, a team that participated in the Cohort 3 Hookathon, also developed its hook using Stylus. 

What is Stylus?

Stylus enables developers to write smart contracts using languages that compile to WebAssembly (WASM), such as Rust, C, and C++. It maintains full interoperability with the Ethereum Virtual Machine (EVM) which means there is no fragmentation to liquidity and composability with existing contracts. Launched on Arbitrum's mainnet in September last year, the Stylus Quickstart, along with the Stylus Rust SDK,CLI, and the Stylus UniswapV4 Hook Template (created by OpenZepplin) provides all the tools developers need to start building their applications and hooks in Stylus today.

Why do Builders Choose Stylus?

Dynamic LP Assurance

The Dynamic LP Assurance Hook, a Uniswap v4 hook designed to protect liquidity providers (LPs) by dynamically collecting insurance fees and enabling flash loans, was created by Mohak Gupta, a blockchain developer and security researcher, and Aryan Kumar, a full-stack developer and freelancer. Based in India, this two-person team brings six years of combined experience in the Web3 space. As passionate DeFi enthusiasts, they recognized a gap in the market: existing liquidity providers in DeFi ecosystems lacked adequate coverage and adaptive protection tailored to dynamic market conditions.

The team turned to Stylus because it ensured their hook was performant, cost-efficient, and flexible. According to Gupta, the Dynamic LP assurance hook is computationally intensive, relying on dynamic calculations to compute and collect insurance fees based on factors such as liquidity volume, current price, and other onchain metrics.

The team found Stylus’s WASM-based execution model to be significantly more optimized than the traditional EVM bytecode, allowing the hook to perform these calculations efficiently without incurring prohibitive gas costs, which would have been a significant obstacle if implemented solely using Solidity.

“Stylus’s performance and cost advantages made it the obvious choice for our dynamic insurance hook. WASM execution allowed us to implement complex fee calculations seamlessly,” Gupta said.

Initially, the team considered offchain alternatives to minimize computational fees, but Gupta said these approaches introduced trust assumptions and additional data fee dependencies. Stylus, on the other hand, enabled them to perform all necessary computations onchain, maintaining the trustless nature of their design while ensuring seamless integration with Uniswap v4’s architecture.

By leveraging Stylus, the team could focus on innovating and refining their hook without being constrained by technical or cost barriers. This choice proved pivotal in creating a solution that addresses key risks for liquidity providers and operates efficiently within a decentralized environment.

Over the coming months, Gupta and Kumar plan to expand the coverage logic, enhance flash loan use cases, and prepare for a production-ready deployment. They are also exploring advanced Stylus tooling to improve their development workflow.

Autopilot Hook

The Autopilot Hook is a Uniswap v4 tool that uses machine learning to adjust fees based on market volatility. By predicting high volatility periods, it protects liquidity providers from impermanent loss and lowers fees during stable times to encourage more trading. The developer behind the Autopilot Hook, Régis Graptin, is a deep-learning engineer with experience in cybersecurity and software development. Graptin’s work on the Autopilot Hook emerged from a personal drive to address impermanent loss and create a more resilient liquidity provision system.

The Autopilot Hook leverages a linear regression model to predict market volatility and dynamically adjust fees, a process that involves intensive calculations. Stylus’s capability to compile different coding languages down to WASM allowed Graptin to implement these models directly onchain without compromising performance or incurring excessive gas costs. Additionally, the Autopilot Hook required a system to store and analyze historical data to improve prediction accuracy over time. Stylus’s compatibility with libraries and tools which are otherwise unavailable using Solidity made it possible to manage this data.

"Stylus allowed me to implement a machine learning approach efficiently," Graptin said. "While Solidity was an option, the gas and storage costs and architectural complexity made Stylus a far better fit."

Another driving factor was Stylus’s potential to lower technical and economic barriers. Stylus’s broader programming language support enabled Graptin to use familiar tools and frameworks for implementing his machine-learning models. Stylus also allowed for cost-effective experimentation and iteration, which is essential for refining and validating complex systems for the Autopilot Hook.

Choosing Stylus aligned perfectly with Graptin's vision of creating a robust, scalable solution for addressing impermanent loss and promoting healthier liquidity pools. By using Stylus, he could focus on developing innovative features without being constrained by the limitations of the EVM or incurring prohibitive costs. This synergy between Stylus and his development goals highlights why it became a cornerstone of the Autopilot Hook’s success.

Build with Stylus

Stylus continues to revolutionize the DeFi landscape by unlocking a new realm of possibilities for hook builders. By enabling low-cost, complex onchain computations and integrating seamlessly with Rust's extensive library ecosystem, Stylus has transformed what was once impractical or economically unfeasible into tangible innovations.

If you are excited about building with Stylus, check out the Stylus Quickstart or get in touch with the Arbitrum team today. Developers who are interested in joining the next Hook Incubator can apply here.