Uniswap's StablePair Hook Exposes Liquidity Providers to Hidden Risks

Uniswap's StablePair hook is designed to keep liquidity providers (LPs) from losing value when rebalancing stablecoin pools. The mechanism compares a cached pool price with a reference stored in the hook's configuration and prices trades around that benchmark.

The dynamic fee logic varies by swap direction to target a consistent bid and ask before price impact. When the pool sits exactly at the reference, both directions pay the configured optimal fee. However, if the pool moves away from the reference, the fee rules split trades by direction, with one direction facing a decaying fee.

LPs can collect fees while rebalancing the pool, but the design cannot protect them if a token loses its peg. If an LP holds coins that lose value, capturing income from rebalancing trades does not reimburse that change in token value.