TopOfBlockAuction

How it works

The first swap in a block against a pool whose price has moved overnight is worth money, and today that money goes to whoever wins the gas auction or pays the builder. The liquidity providers, whose stale quote is the entire source of the value, receive the ordinary swap fee and nothing else. This is the largest single transfer away from passive liquidity in the system, and it happens in a market the pool cannot see and does not participate in.

The idea of auctioning that right and paying the pool instead is not new: it is the am-AMM proposal, and MEV-Share and MEV-Boost redistribute adjacent value off-chain. What has been missing is a version the pool runs itself, per block, with no auctioneer, no off-chain infrastructure and nobody to trust with the proceeds. This is that.

A searcher bids native currency for a named future block. The highest bid at the time the block arrives wins the exclusive right to the first swap in it, and the bid is paid to the pool's liquidity providers. Everybody else can still trade in that block, just not first.

Once the winner has taken their slot, or if nobody bid, the pool is ordinary. Bidding on a future block rather than the current one is what makes this work without an auctioneer. A bid for the block being built cannot be evaluated inside that block without knowing bids that have not arrived, so the auction would have to be settled by somebody.

Bidding one block ahead means the winner is already known when the block opens, and the contract simply checks who it is. A losing bid is never taken. Bids are held and the loser withdraws in full, so bidding costs nothing but gas, and a searcher who is outbid is not out of pocket.

Using it

Uniswap v4 removed hookData from initialize, so per-pool parameters arrive out of band. Fix them for a pool key whose pool does not exist yet, then initialize. Nobody can change them afterwards, including you.

hook.configure(
    key,
    TopOfBlockAuctionHook.Config({
        leadBlocks: /* uint32 */ 0,
        minBid: /* uint128 */ 0
    })
);

poolManager.initialize(key, startingSqrtPriceX96);

Parameters

From TypeScript

npm i @hookforge/sdk

import {getHook, hookAddress, poolKeyFor} from "@hookforge/sdk";

const hook = getHook("top-of-block-auction");
const key  = poolKeyFor({
  hook: hookAddress("top-of-block-auction", 8453),   // Base
  currencyA: USDC, currencyB: WETH,
  tickSpacing: 60,
});

What it reverts with

The callbacks it claims

Uniswap v4 reads a hook's permissions from the low fourteen bits of its own address, which is why deploying one means mining a CREATE2 salt. This hook claims 2, so every deployment of it has an address ending in 0x1080.

• beforeInitialize
• afterInitialize
• beforeAddLiquidity
• afterAddLiquidity
• beforeRemoveLiquidity
• afterRemoveLiquidity
• beforeSwap
• afterSwap
• beforeDonate
• afterDonate
• beforeSwapReturnsDelta
• afterSwapReturnsDelta
• afterAddLiquidityReturnsDelta
• afterRemoveLiquidityReturnsDelta

It says what it is, on-chain

Nothing about a hook's address tells an indexer, a wallet, a router or an agent what the pool does, which is why hook discovery today is a curated list. This hook answers for itself, in one eth_call, with no registry in the loop.

cast call $HOOK "hookName()(string)"    # TopOfBlockAuction
cast call $HOOK "specURI()(string)"     # https://top-of-block-auction.pages.dev/hook.json
cast call $HOOK "hookTags()(string[])"  # mev, auction, order-flow, lp-economics, no-admin

Build, test and deploy

git clone --recurse-submodules https://github.com/nirholas/top-of-block-auction
cd top-of-block-auction
forge build && forge test

# Dry run: mines the salt, prints the address, sends nothing.
forge script script/Deploy.s.sol --rpc-url $RPC_URL

# For real.
forge script script/Deploy.s.sol --rpc-url $RPC_URL --broadcast --verify

Try it

This is the hook running, not a picture of it. Connect a wallet on a chain it is deployed to, or bring the whole stack up locally in one command and use it with no funds and no wallet risk at all.

git clone --recurse-submodules https://github.com/nirholas/top-of-block-auction
cd top-of-block-auction

anvil &
forge script script/DeployLocal.s.sol --rpc-url http://127.0.0.1:8545 --broadcast \
  --private-key 0xac0974bec39a17e36ba4a6b4d238ff944bacb478cbed5efcae784d7bf4f2ff80

node web/build.mjs && npx serve web/dist