Skip to main content
Helpful?

Decrease Liquidity

Context​

Please note that PositionManager is a command-based contract, where integrators will be encoding commands and their corresponding parameters.

Decreasing liquidity assumes the position already exists and the user wants to remove tokens from the position.

Setup​

See the setup guide

Guide

Below is a step-by-step guide for decreasing a position's liquidity, in solidity.

1. Import and define IPositionManager​

import {IPositionManager} from "v4-periphery/src/interfaces/IPositionManager.sol";

// inside a contract, test, or foundry script:
IPositionManager posm = IPositionManager(<address>);

2. Encode Actions​

To decrease a position's liquidity, the first action must be:

  • decrease operation - the subtraction of liquidity to an existing position.

For delta resolving operations, developers may need to choose between TAKE_PAIR, CLOSE_CURRENCY, or CLEAR_OR_TAKE actions.

In Uniswap v4, fee revenue is automatically debited to a position on decreasing liquidity

If decreasing the liquidity requires the transfer of both tokens:

  • take pair - receives a pair of tokens, to decrease liquidity

Otherwise:

  • clear or take - if the token amount to-be-collected is below a threshold, opt to forfeit the dust. Otherwise, claim the tokens
import {Actions} from "v4-periphery/src/libraries/Actions.sol";

If both tokens need to be sent:

bytes memory actions = abi.encodePacked(uint8(Actions.DECREASE_LIQUIDITY), uint8(Actions.TAKE_PAIR));

If converting fees to liquidity, forfeiting dust:

bytes memory actions = abi.encodePacked(uint8(Actions.DECREASE_LIQUIDITY), uint8(Actions.CLEAR_OR_TAKE), uint8(Actions.CLEAR_OR_TAKE));

3. Encoded Parameters​

When taking pair:

bytes[] memory params = new bytes[](2);

Otherwise:

bytes[] memory params = new bytes[](3);

The DECREASE_LIQUIDITY action requires the following parameters:

ParameterTypeDescription
tokenIduint256position identifier
liquidityuint256the amount of liquidity to remove
amount0Minuint128the minimum amount of currency0 liquidity msg.sender is willing to receive
amount1Minuint128the minimum amount of currency1 liquidity msg.sender is willing to receive
hookDatabytesarbitrary data that will be forwarded to hook functions
params[0] = abi.encode(tokenId, liquidity, amount0Min, amount1Min, hookData);

The TAKE_PAIR action requires the following parameters:

  • currency0 - Currency, one of the tokens to be received
  • currency1 - Currency, the other token to be received
  • recipient - Recipient, the recipient to receive the tokens

In the above case, the parameter encoding is:

Currency currency0 = Currency.wrap(<tokenAddress1>); // tokenAddress1 = 0 for native ETH
Currency currency1 = Currency.wrap(<tokenAddress2>);
params[1] = abi.encode(currency0, currency1, recipient);

The CLEAR_OR_TAKE action requires one currency and:

  • amountMax - uint256, the maximum threshold to concede dust, otherwise taking the dust.

In this case, the parameter encoding is:

params[1] = abi.encode(currency0, amount0Max);
params[2] = abi.encode(currency1, amount1Max);

4. Submit Call​

The entrypoint for all liquidity operations is modifyLiquidities().

uint256 deadline = block.timestamp + 60;

uint256 valueToPass = currency0.isAddressZero() ? amount0Max : 0;

posm.modifyLiquidities{value: valueToPass}(
    abi.encode(actions, params),
    deadline
);
Helpful?