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Collect Fees

Setup​

See the setup guide

Guide

In order to collect fees, the integrator must execute encoded actions using the PositionManager contract. Note that there is no COLLECT command, instead developers must decrease liquidity with a zero liquidity change.

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 collect fees, the following operations are required:

  • decrease liquidity - collect fees from the core contract
  • take pair - transfer the fee revenue, as both tokens, to a recipient
import {Actions} from "v4-periphery/src/libraries/Actions.sol";
bytes memory actions = abi.encodePacked(uint8(Actions.DECREASE_LIQUIDITY), uint8(Actions.TAKE_PAIR));

3. Encode Parameters​

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

The DECREASE_LIQUIDITY action requires the following parameters:

ParameterTypeDescription
tokenIduint256position identifier
liquidityuint256the amount of liquidity to withdraw
amount0Minuint128the minimum amount of currency0 liquidity msg.sender is expecting to get back
amount1Minuint128the minimum amount of currency1 liquidity msg.sender is expecting to get back
hookDatabytesarbitrary data that will be forwarded to hook functions

Note that in order to collect fees we will default liquidity, amount0Min and amount1Min to 0. Because fee collection can not be manipulated in a front-run attack, it is safe to set the slippage values amount0Min, amount1Min to 0.

/// @dev collecting fees is achieved with liquidity=0, the second parameter
params[0] = abi.encode(tokenId, 0, 0, 0, hookData);

The TAKE_PAIR action requires the following parameters:

  • currency0 - Currency, one of the tokens to be paid by msg.sender
  • currency1 - Currency, the other token to be paid by msg.sender
  • recipient - address, destination of the fee revenue for both tokens
Currency currency0 = Currency.wrap(<tokenAddress1>); // tokenAddress1 = 0 for native ETH
Currency currency1 = Currency.wrap(<tokenAddress2>);
params[1] = abi.encode(currency0, currency1, recipient);

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
);

Additional notes:​

  • To obtain the amount of fees received, callers should read token balances before and after the .modifyLiquidities() call.
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