SLH is a PancakeSwap V4 hook developed to maximize rewards for Liquidity Providers (LPs) in stablecoin pairs such as USDC/USDT. This project introduces a novel mechanism that allows liquidity pools to generate profits from both liquidity provision and lending simultaneously.
This project is to be considered WIP and won 1st Prize at V4 Hookaton! This is not production ready and needs to be improved for such scope.
Further development will still take place in this repository. Stay tuned
The SLH keeps 30% of the pool’s capacity as active liquidity to facilitate small trades, while the remaining 70% is deposited into the Aave v3 market to maximize the efficiency of idle liquidity.
Whenever a trade pushes the price beyond the predefined slippage threshold, the hook automatically withdraws the entire liquidity from Aave to ensure there is sufficient liquidity for a fair swap execution.
Each time liquidity is added or removed, an event is emitted and recorded in a receipt list that is submitted to the Brevis prover. The Brevis circuit computes time-based contribution points, allowing LPs to claim their share of rewards generated while providing liquidity. LPs can unlock their rewards by requesting a Brevis proof, which validates their contribution.
├── app # Frontend and application logic
├── contracts # Foundry folder containing smart contracts
└── prover # Brevis circuits for proof generation
The project is organized into three main components:
During development, several challenges were encountered:
-
PancakeSwap V4: With minimal prior knowledge of PancakeSwap V4, understanding its mechanism was a significant learning experience. One notable issue was the LockAlreadySet() error encountered during position modification in a swap. This error comes from the settlement guard (reentrancy guard) mechanism. After investigating, I found the
modifyLiquidityWithNoLock()function, although figuring out the correct parameters was difficult due to limited documentation. Overall, the experience was rewarding despite the lack of examples. -
Brevis Integration: Integrating Brevis was a more difficult task, as I had never worked with Go before. Writing and compiling the circuit took a full day, but I eventually succeeded. Unfortunately, I ran into issues with submitting valid receipts to the Brevis prover service, which I’m still working to resolve.
This project is a Proof of Concept (PoC), with many areas for optimization and improvement. Planned enhancements include:
- Supporting multiple keys for better flexibility.
- Optimizing the code for performance and efficiency.
- Adapting the hook to work on other blockchains that support Aave, such as Binance Smart Chain (BSC) and Polygon.
The code will be maintained and improved as time permits.
This project is licensed under the MIT License. See the LICENSE file for details.