Limit Order Hook on Uniswap V4

Custom hook logic for placing a limit order on any Uniswap v4 concentrated liquidity pool.

Exampled based on https://learnweb3.io/lessons/uniswap-v4-hooks-create-a-fully-on-chain-take-profit-orders-hook-on-uniswap-v4/

Limit Orders

Allows users to place and cancel a limit (take-for-profit) order fully on-chain by:

Users places limit order by calling placeOrder() in the v4 hook.
User mints ERC-1155 token as receipt of limit order. Allows user to withdraw funds if order is fufilled.
afterswap() function is used to check the new price everytime the user makes a swap. So if market price is greater than the "strike" price or price set on a tick, $p > s$ the order is in profit and therefore fufilled (market selling).
Users burn ERC-1155 recipt token to withdraw fufilled tokens.

TakeProfitsHook contract is BaseHook and a ERC1155 token.

BaseHook is a template contract provided by Uniswap Labs that implements IHook interface.

V4 hooks use the poolManager as a controller and in order to override a function that the hook is selecting it must return a function selector so that the poolManger can verify that the custom hook is calling the correct function.

Ticks repersent prices for a given pair in Uniswap v4 as they do in V3. Becuase solidity does support floating point arithemtic (decimals), Uniswap uses Q notation. In short, we can repersent decimals as fixed point artithemtic (integers) by converting it.

Convert sqrtPriceX96 to sqrtPrice by dividing $2^{96}$. Read more here:

https://blog.uniswap.org/uniswap-v3-math-primer

To figure out the price at a tick we use the formula: $p(i) = 1.001^{i}$.

Since all prices are denominated in a "quote" token from a pair we have tokenA and tokenB where if the tick is 90 then the price of tokenA at that tick is $p(90) = 1.001^{90}$ which is equal to $1.09412507977$ and therefore 1 tokenA = 1.09412507977 tokenB.

So if we take the case of ETH in a ETH/USD pair, to get the exchange rate at a tick we simply use the formula where at tick $i = 1060$:

....

Do to the .001 or 1 bip interval Uniswap have a tickLower and tickUpper to avoid rounding issues.

In order to manipulate the ticks we need to store them with each pool using a mapping data structure which has a key and value. The key is the PoolKey and the value is PoolID, a bytes32 type inherited from the PoolIDLibrary.

When a pool is intialized so is a tick with an arbitary value. Calling afterInitialize we can pass in a tick value and it calculates the new tickLower value.

A limit order is placed for a specific PoolID at a specific tick in a specific direction, zeroForOne (sell)., and for a specofoc amount of tokens.

TO-DOs

Write forge tests
Implement afterSwap()

Local Deployment and Usage

Build

$ forge build

Test

$ forge test

Format

$ forge fmt

Gas Snapshots

$ forge snapshot

Anvil

$ anvil

Deploy

$ forge script script/Counter.s.sol:CounterScript --rpc-url <your_rpc_url> --private-key <your_private_key>

Cast

$ cast <subcommand>

Help

$ forge --help
$ anvil --help
$ cast --help

robertleifke/limit-orders