Uniswap Introduces Dynamic Fees for Two Stable-Pair Pools

Uniswap Labs has deployed a new StablePair Hook on Uniswap v4, enabling dynamic liquidity‑provider fees for two stablecoin pools on Ethereum: USDC/USDT and USDC/USDG.

How the Dynamic Fee Model Works

Each pool is configured with a reference rate and a narrow price band around that rate. The hook adjusts the LP fee based on the pool’s current price relative to the reference and the direction of the trade.

• Inside the band, fees are set to keep pre‑price‑impact buy and sell quotes consistent.
• At the reference rate, both trade directions pay the configured band width.
• Near the band edge, fees for trades moving toward the edge fall toward zero, while fees for opposite‑direction trades rise to roughly twice the band width.
• Outside the band, trades that push the pool further from the reference rate incur no fee, as they do not capture existing mispricing.

Corrective Trade Auction

When a trade would correct a price deviation, it is auctioned with an initial fee set at the far edge of the band. This fee decays once per block until the trade is executed, allowing the pool to capture part of the arbitrage spread as revenue.

Impact and Governance

The mechanism does not remove price impact; fees are independent of swap size, and large trades can still move the pool’s pricing curve. Pool parameters and fee logic can be updated via Uniswap governance without requiring liquidity migration.

Scope

StablePair is currently limited to the two Ethereum pools mentioned above. Uniswap reports that stablecoin‑to‑stablecoin swaps on its protocol totaled $43.4 billion in the second quarter.