On August 7, Uniswap co-founder Hayden Adams published a post detailing an auto-compounding liquidity design he personally contributed to pools.trade, describing it as "quite elegant." Under the mechanism, once a liquidity position is deposited into a smart contract, anyone can withdraw all unclaimed fees, provided they simultaneously increase the size of the position by 0.2%. As fees accumulate over time, once their value exceeds 0.2% of the liquidity, searchers are naturally incentivized to add 0.2% liquidity to claim the fees, forming a self-sustaining compounding loop without external intervention. Adams called the mechanism "super simple and clean," and said it is built on Uniswap's token vault concept. He further noted that the design is also applicable to regular Uniswap LP positions for auto-compounding, so the team has decided to incorporate it into the Uniswap roadmap. That means Uniswap liquidity providers may eventually get a native auto-compounding feature. Adams shared the proposal on August 7, and the design is now slated for the Uniswap roadmap.
On August 7, Uniswap co-founder Hayden Adams published a detailed design for an auto-compounding liquidity mechanism that he personally contributed to pools.trade. He called the approach "quite elegant."
The core logic is straightforward. A liquidity position is deposited into a smart contract, and anyone is allowed to withdraw all unclaimed fees from that position, as long as they also increase the size of the position by 0.2%. Over time, fees keep stacking up. Once their value exceeds that 0.2% threshold, searchers are naturally motivated to add 0.2% more liquidity so they can claim the accumulated fees. That creates a self-running compounding loop, with no external operator needed.
Adams described the mechanism as "super simple and clean," built on Uniswap's token vault concept. He also pointed out that the same design can be applied to ordinary Uniswap LP positions, which is why the team has decided to fold it into the Uniswap roadmap. For liquidity providers, this could eventually mean a native auto-compounding feature in the future.
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