Strategic liquidity provision in uniswap v3 The Uniswap v3 core contracts are also non-upgradeable, with some parameters controlled by governance as described in Section 4. 12033 (2021). Aug 12, 2021 · The recently proposed Uniswap v3 replaces the fungible liquidity provider token (LP token) into non-fungible ones, making the design for liquidity mining more difficult. , profit-maximizing) strategy of a monopolist liquidity provider, as a function of that LP's beliefs about asset prices and trader behavior, based on a Bayesian-like belief inference framework. Even with rebalancing needs, the vast majority of capital deployed for liquidity provision on v3 are relatively passive. [25] study strategic liquidity provision in Uniswap V3 and evaluate three classes of strategies for liquidity providers. Neuder,R. For CL positions the value function should be separated in three parts: in-range, below range and above range. Figure 14 OIRA allocation and ODRA average allocation for τ = 20 for low volatility PM as we modulate risk-aversion from a = 0 to a = 20. With the introduction of Uniswap v3, liquidity providers are given the option to differentially allocate Apr 6, 2023 · For context, Uniswap’s volume was almost two thirds of the largest CEX (Binance’s) volume on the same day. 01, 0. To perform a backtest of their theoretical analysis, they run their strategy over the March 2018 — April 2020 period, and compare of strategic liquidity provision: v3 Figure 2 The reserve curve of Uniswap v2 over all prices, and of Uniswap v3 over the price interval[P a,P b Z. Similarly, the upper bound on the amount of token B which can be present in an active bundle for B∗i is given by ȳ. Concentrated liquidity pools account for 85% of the volume on Uniswap. With the introduction of Uniswap v3, liquidity providers can differentially allocate liquidity to trades that occur Dec 27, 2024 · - Adaptive Liquidity Provision in Uniswap V3 with Deep Reinforcement Learning ( 2023-09-18 ) - Strategic Liquidity Provision in Uniswap v3 ( 2021-06-22 ) - The Dominance of Uniswap v3 Liquidity ( 2022-05-04 ) 2-2: Security Challenges in DEXs: What Uniswap Can Do Security Challenges in DEXs: What Uniswap Can Do Mar 4, 2023 · Finally, we use Uniswap v3 and Binance transaction data to compute PL and fees collected by LPs and show that, at present, liquidity provision in CFMs is a loss-leading activity. Select “New”. Nov 8, 2023 · To change the price range of a position you must remove the liquidity position, then create a new position with the desired price range. Our proposal is designed to optimize capital efficiency, long-term growth, and overall benefits to the Uniswap protocol. 00005} in columns from left to right. This model innovatively frames the valuation of positions The best-known Concentrated Liquidity Market Makers (CLMM) are Uniswap V3 and Trader Joe’s Liquidity Book. We now present the online learning strategy for liquidity provision, where at each time step, we re-invest our entire portfolio in a price range centered at the current spot price. Fan,F. The latest version, Uniswap v3, changed how liquidity providers provide, and are rewarded for The contract price, P , corresponds to the active bundle (x∗, y∗). With its innovative features, it has revolutionized the way decentralized finance (DeFi) operates, offering improved efficiency, flexibility, and greater control for liquidity providers. To learn more about removing liquidity and creating a position, see the following: How to remove a liquidity position from Uniswap v3; How to add liquidity on Uniswap v3 Feb 1, 2023 · Download Citation | Uniswap Liquidity Provision: An Online Learning Approach | Decentralized Exchanges (DEXs) are new types of marketplaces leveraging Blockchain technology. Marmolejo-Cossio,D. a range of 0. An LP earns fee rewards prop… Jul 2, 2021 · Figure 9 from “Strategic Liquidity Provision in Uniswap v3”. For one, it used to advertise¹ the extremely misleading “230x times more utility” in Uniswap v3 compared with Uniswap v2. 026 ETH in fees in the following 24 hours (according to Uniswap subgraph data). Google Scholar [26] R Tyrrell Rockafellar, Stanislav Uryasev, et al. - "Strategic Liquidity Provision in Uniswap v3" - "Strategic Liquidity Provision in Uniswap v3" Figure 12 The performance of OIRA and ODRA strategies as we modulate PM and λ. An LP earns fee rewards proportional to the amount of its liquidity allocation when prices move in this interval. 25 Corpus ID: 235606357; Strategic Liquidity Provision in Uniswap v3 @inproceedings{Neuder2021StrategicLP, title={Strategic Liquidity Provision in Uniswap v3}, author={Michael Neuder and Rithvik Rao and Daniel J. Parkes, Zhou Fan, and Francisco Marmolejo-Cossío. Fully Fungible: Wrapped using the ERC20 token standard, Arrakis vaults are composable with other DeFi protocols. Jul 15, 2024 · What is Uniswap V3 & How is it Different from Uniswap V2. Nov 18, 2024 · Uniswap V3 is the third iteration of one of the most popular decentralized exchanges (DEX) in the world. Metrix Finance provides every analytic endpoint you need to find the best & most profitable positions. Here I show to obtain the coefficients for CL positions. We formalize this problem and study three classes of strategies for liquidity providers: uniform, proportional, and optimal (via a constrained optimization problem). 000075, 0. The columns correspond to risk-aversion values a = 0, 10, and 20, respectively from left to right. Heimbach et al. While the price of the asset remains in that interval, the liquidity provider earns rewards proportionally to the amount of liquidity Sep 19, 2024 · Strategic liquidity provision in uniswap v3,” arXiv preprint arXiv:2106. In earlier versions, liquidity was distributed uniformly along the price curve between 0 and infinity. Should this standard gain widespread adoption, it could fundamentally alter the dynamics of DEXs, with Uniswap—the DEX with the largest TVL—standing at the epicenter of this seismic shift. By allowing Uniswap v3 positions to be bonded, bonding protocols receive end-to-end liquidity services for Sep 17, 2024 · Abstract. The “alpha" and the “tau" bins are illustrated. As in our work, they assume that LPs holds beliefs that contract Jul 29, 2021 · This proposal outlines a framework for establishing a liquidity incentives program (Uniswap Liquidity Program, ULP) with the goals of: accelerating the migration of liquidity to Uniswap v3; encouraging new market participants to experiment with liquidity provision, further distributing ownership of UNI tokens, and supporting ecosystem growth Figure 3 An aggregate distribution of liquidity for a Uniswap v3 contract (left plot), with most liquidity allocated close to unit price P = 1. A trader can send ∆x units of token A to receive ∆y units of token B, such that x′y′ = L2, where x′ = x+∆x and y′ = y −∆y. In decentralized finance ("DeFi"), automated market makers (AMMs) enable traders to programmatically exchange one asset for Aug 24, 2021 · This proposal outlines a framework for establishing a liquidity incentives program (Uniswap Liquidity Program, ULP) with the goals of: accelerating the migration of liquidity to Uniswap v3; encouraging new market participants to experiment with liquidity provision, further distributing ownership of UNI tokens, and supporting ecosystem growth Jun 22, 2021 · The newest version, called Uniswap v3, allows liquidity providers to allocate liquidity to one or more closed intervals of the price of an asset, instead of over the total range of prices. Michael Neuder Rithvik Rao Harvard University Harvard University [email protected] [email protected] Daniel J. Jun 22, 2021 · We formalize this problem and study three classes of strategies for liquidity providers: uniform, proportional, and optimal (via a constrained optimization problem). Moroz David C. These pools enable token swaps and are the foundation of the platform’s automated market maker (AMM) model We find that providing liquidity in Uniswap V3 is significantly more complex, exemplified by the stark difference in liquidity position returns dependent on their strategies, even within the same pool. When the strategy last reset, the price was 𝑏𝑠 . - "Strategic Liquidity Provision in Uniswap v3" The columns correspond to risk-aversion values a = 0, 10, and 20, respectively from left to right. - "Strategic Liquidity Provision in Uniswap v3" Treccani(2021). (2023) propose a liquidity provision strategy in pools with CL,Heimbach et al. 2023. The newest version, called Uniswap v3, allows liquidity providers to allocate liquidity to one or more closed intervals of the of strategic liquidity provision: v3 Figure 2 The reserve curve of Uniswap v2 over all prices, and of Uniswap v3 over the price interval[P a,P b May 31, 2023 · the value of a full range LP position, Uniswap v2 style, grows with the square root of the price. The launch of Uniswap V3 in mid-2021 brought up a concept of concentrated liquidity. arXiv preprint arXiv:2106. Uniswap v3 is the largest decentralized exchange for digital currencies, and allows a liquidity provider (LP) to allocate liquidity to one or more closed intervals of the price of an asset. If you had put a single ETH in the Uniswap’s USDC/WETH 0. 00005), (0. The height of the bars indicates the amount of liquidity in each bin. They allow users to trade assets with Automatic Market Makers (AMM Some works in the literature study strategic liquidity provision in CFMs and CPMs with CL. Risks and returns of uniswap v3 liquidity providers Jul 12, 2023 · Uniswap v3 CL example. Uniswap v3 is the largest decentralized exchange for digital currencies. sign, so Uniswap v3 is implemented as an entirely new set of contracts, available here. Jun 30, 2024 · Liquidity provision is the act of depositing tokens into Uniswap’s liquidity pools. If the pool has reserves (x, y) where x and y represent units of token A and B respectively, then the contract price of token A is P = y/x. The specific reallocation after each trigger is specified by the allocation function A in the τ -reset strategy. Jul 16, 2021 · Authors: @itzler, @HelloShreyas, @verto0912 Summary: This proposal outlines a framework for establishing a liquidity incentives program (Uniswap Liquidity Program, ULP) with the goals of: accelerating the migration of liquidity to Uniswap v3; encouraging new market participants to experiment with liquidity provision, and further distributing ownership of UNI tokens. Feb 15, 2022 · Uniswap v3 is the most capital efficient DEX on the market today. 05% pool at the start of 11th March, selecting the reasonable price range from 1450 to 1700 USDC per ETH, your position would have received 0. Clark’s paper works out the coefficients required to hedge a full range Uniswap position. 000025, 0. 00005 and we modulate the α in {0. In this paper, we characterize the continuous-time wealth dynamics of strategic liquidity providers (LPs) who dynamically adjust their range of liquidity provision in CL pools. (2023b) study the predictable losses of LPs in a continuous-time setup,Milionis et al. A novelty of its design is that it allows a liquidity provider (LP) to allocate liquidity to one or more closed intervals of the price of an asset instead of the full range of possible prices. 11. Sep 16, 2024 · TLDR: The ERC-7683 standard, presented in Q2 2024 by Uniswap Labs and Across, establishes a unified framework for intent-based systems to define cross-chain actions precisely. This approach to liquidity Strategic Liquidity Provision in Uniswap v3. Your chosen pric Why is liquidity position ownership represented by tokens or NFTs? When a liquidity position is created, it is represented by Liquidity Provider (LP) Tokens Nov 30, 2021 · However, Uniswap V2 AMMs in early 2020 made a case for passive liquidity provision strategies, they still lag behind active liquidity provision strategies in achieving capital efficiency. To add liquidity on Uniswap v3: Open the web app and connect your wallet. Constant product markets with concentrated liquidity (CL) are the most popular type of automated market makers. The migration process involves removing all liquidity and fees from the v2 position. Yang View PDF Abstract: Decentralized exchanges (DEXs) are a cornerstone of decentralized finance (DeFi), allowing users to trade cryptocurrencies without the need for third-party authorization. This results in an aggregate reserve curve (right, red line), which is flatter than the corresponding v2 curve (dotted blue) at prices close to P = 1 and supports a larger volume of trades at these prices with less slippage. Sep 17, 2024 · Abstract. (2022) discuss the tradeoff between risks and returns that LPs face in Uniswap v3, Cartea et al. Jun 22, 2021 · Experimental results based on the historical price data of Ethereum show that simple liquidity provision strategies can yield near-optimal utility and earn over 200x more than Uniswap v2 liquidity provision. Ethereum project yellow paper. Apr 1, 2022 · With the introduction of Uniswap v3, liquidity providers are given the option to differentially allocate liquidity to be used for trades that occur within specific price intervals. In Section 4 we analyze the strategic Dec 13, 2024 · Uniswap v3 allows liquidity providers to concentrate liquidity within a custom price range. ”AFT Jul 5, 2023 · Strategic Liquidity Provision in Uniswap v3. We formalize this problem as an online learning problem with non-stochastic rewards. Dec 5, 2023 · We consider a Uniswap v3 Liquidity Pool, consisting of token A and token B with an interval size \(d\in [1. Moroz and David C. Dr. There is a soft-max function applied to the output layer. pdf), Text File (. Uniswap v2 allows liquidity providers to add liquidity across the full price range for a token pair. These tokens are then transferred to the newly added liquidity on v3. However, Uniswap V3 requires far more decisions from liquidity providers than previous DEX designs. Figure 1 The reserve curve for Uniswap v2. Some features, like the price oracle originally introduced in Uniswap v2 and included in Uniswap v3, allow integrators to uti-lize decentralized onchain pricing data, at the Mar 1, 2023 · The goal of this paper is to characterize and interpret the optimal (i. The Galxe DAO is gearing up for a significant move to…. StrategicLiquidityProvisioninUniswapv3 Zhou Fan # HarvardUniversity,USA Francisco Marmolejo-Cossio # HarvardUniversity,USA IOG,USA Daniel Moroz # HarvardUniversity Concentrated liquidity Uniswap V3 Pools use concentrated liquidity to allow a denser concentration of liquidity at specific prices. The value functions of out-of-range parts are simple lines. The newest version, called Uniswap v3, allows liquidity providers to allocate liquidity to one or more closed intervals of the price of an asset, instead of over the total range of prices. Uniswap V3 represents the latest iteration in the evolution of one of the most popular decentralized finance (DeFi) platforms for swapping cryptocurrencies. Uniswap v2, passive liquidity providers can enter a market making position without any additional intervention. We modulate a in {0, 10, 20} in columns from left to right and η ∈ {0. Migrating liquidity to Uniswap v3 allows providers to concentrate liquidity within a custom price range. This feature allows LPs to allocate their capital to specific price ranges, enhancing capital efficiency and yielding higher returns while simultaneously mitigating price risk. Jun 22, 2021 · Uniswap v3 is the largest decentralized exchange for digital currencies. Cross Fee Tier Vaults: Enables liquidity provision across different fee tiers. Try again later. 1 Outline Section 2 introduces parts of the Uniswap v3 protocol relating to the core liquidity provision scheme. Amongst these, constant function market maker DEXs such as Uniswap handle the most volume of trades between ERC-20 tokens. The main appeal of Olympus Pro is the ability for protocols to acquire their own liquidity, and the main appeal of Gamma is managing protocol-owned liquidity on Uniswap v3. Moroz,M. “ Strategic Liquidity Provision in Uniswap v3. C. When the price in a CEX changes to $1100, the price in Uniswap becomes attractive for arbitraging. Uniswap uses liquidity pools to provide Automated Market Making (AMM) functionality Liquidity Math un Uniswap v3 - Derivation of several key Liquidity Provision formulas from Uniswap v3 Concentrated Liquidity in Automated Market Makers - Analysis of returns of concentrated liquidity provision since Uniswap v3's release, as well as a comparison of the perfermance of different strategies. Their wealth results from fee income, the value of their holdings in the pool, and rebalancing Nov 19, 2024 · In this paper, we introduce a novel pricing model for Uniswap V3, built upon stochastic processes and the Martingale Stopping Theorem. The newest version, called Uniswap v3, allows liquidity providers to allocate liquidity to one or more closed intervals of the price of an asset, instead of over the total range of Jan 17, 2024 · The strategic positioning of our liquidity in Uniswap V3 is therefore twofold: (1) to generate trading fees and (2) to create a hedge against our short position. For each - "Strategic Liquidity Provision in Uniswap v3" Figure 9 The performance of all strategies as we modulate both risk-aversion and PM . 00003, 0. Building on the success of its predecessors, V3 introduces several key innovations aimed at improving liquidity provision and Table 1 Relevant Notation - "Strategic Liquidity Provision in Uniswap v3" DOI: 10. [15], who study strategic liquidity provision in Uniswap v3. Moroz, David C. Figure 13 OIRA allocation and ODRA average allocation as we modulate PM and - "Strategic Liquidity Provision in Uniswap v3" Feb 1, 2023 · This work uses regret-minimization methods to show a liquidity provision strategy that guarantees a lower bound on the reward even for non-stochastic changes to asset pricing, and expresses this bound in terms of the trading volume. This meant that capital efficiency was greatly amplified the narrower the supported price range (i. Their wealth results from fee income, the value of their holdings in the pool, and rebalancing Oct 27, 2023 · Uniswap V3, at the forefront of this innovation, has revolutionized liquidity provisioning with its concentrated liquidity feature. But both remain more complex than the liquidity provision many crypto users have grown accustomed to. In this paper, we formalize the profit and loss that liquidity providers can earn when providing specific liquidity positions to a contract. However, this advancement brings forth complex decision-making Jun 7, 2023 · Dear Uniswap v3 Community, As experienced contributors in the DeFi space and pioneers of the successful UNI OP LM campaign, we at DefiEdge are excited to participate in these essential discussions surrounding the distribution of ARB tokens. 000025), (0. Ethereum: A secure decentralised generalised transaction ledger. Removing liquidity from Uniswap v3 will withdraw all pooled tokens and any earned fees. inducestheproblemofstrategic liquidity provision: Figure 2 The reserve curve of Uniswap v2 over all prices, and of Uniswap v3 over the price interval[P a,P b work presents a more general class of liquidity provision strategies for Uniswap v3, and introduces a Markov model to evaluate the expected utility of different strategies. - "Strategic Liquidity Provision in Uniswap v3" For all plots, we use high volatility PM . In comparison to earlier versions of the protocol, Uniswap v3 provides increased capital efficiency and liquidity providers and allowed for new liquidity provision strate-gies, Uniswap v3 lacks flexibility to support new functionalities invented as AMMs and DeFi have evolved. You can earn up to 320% more this way, as your money constantly works for you instead of lying idly in a pool. 33× 10−7 - "Strategic Liquidity Provision in Uniswap v3" Figure 7 Log ratios of consecutive prices (per-minute) between different asset pairs. For all plots, we use a = 10 for risk aversion and λ̄ = 0. - "Strategic Liquidity Provision in Uniswap v3" Apr 25, 2024 · Uniswap, the leading decentralized exchange platform, has come a long way since the launch of V1 back on November 2, 2018. 2023. Section 3 introduces the framework of liquidity mining design. 14× 10−6 and σ2 ≈ 8. Aigner. Therefore, instead of constructing an optimized pool on one’s own accord and continuously rebalancing and relocating the scope, the ALM protocol is the best option if a suitably optimized liquidity This paper extends a growing body of literature around the incentives of liquidity provision from on-chain implementations of CFMMs. This piece will provide a detailed explanation with concepts, math, and code to help traders, researchers, and liquidity providers better understand all things liquidity-related in Uniswap v3 and v4. A. Jun 22, 2021 · The newest version, called Uniswap v3, allows liquidity providers to allocate liquidity to one or more closed intervals of the price of an asset, instead of over the total range of prices. (2022) discuss the tradeoff between risks and returns that LPs face in Uniswap v3,Cartea Sep 18, 2023 · A deep reinforcement learning (DRL) solution designed to adaptively adjust these price ranges, maximizing profits and mitigating market risks is introduced, which neutralizes price-change risks by hedging the liquidity position through a rebalancing portfolio in a centralized futures exchange. The previously uniform distribution allowed trading across the entire price interval (0, ∞) without any loss of liquidity. With the introduction of Uniswap v3, liquidity providers are given the option to differentially allocate liquidity to be used for trades that occur within specific price intervals. Although studies suggest Oct 11, 2023 · Uniswap’s V3 pools and TradeJoe’s Liquidity Book model have enabled more concentrated liquidity provision, greater trading fees for liquidity providers, and better trade execution with lower slippage for traders. Jun 22, 2021 · Abstract: Uniswap v3 is the largest decentralized exchange for digital currencies. Upload an image to customize your repository’s social media preview. Next, select “Pool”. To add liquidi How to remove liquidity from Uniswap v3. We formalize the dynamic liquidity provision problem, and focus on a general class of strategies for which we provide a neural network-based optimization framework for maximizing LP earnings. Parkes Harvard University Harvard University [email protected] [email protected] sign, so Uniswap v3 is implemented as an entirely new set of contracts, available here. The SLP strategy is based on a novel model of the Uniswap v3 market that captures the key features of the market, including the time-varying nature of the LP earnings Jan 11, 2023 · Multiple Concentrated Liquidity Positions: Construct any arbitrary combination of liquidity positions in a Uniswap v3 pool. Parkes We formalize the problem of strategic liquidity provision and study three classes of strategies for liquidity providers: uniform, proportional, and optimal (via a constrained optimization problem). In this work, we develop a theoretical model to illustrate the choices faced by Uniswap V3 liquidity providers and their implications. Heimbach et al. This change is due to the unique, customizable price ranges that each A technical note shows how derive some of the results from the Uniswap v3 whitepapers, as well as presents several other equations not discussed in the whitepaper, and shows how to apply these equations. May 18, 2022 · Strategic Liquidity Provision in Uniswap v3. How to add liquidity to Uniswap v2. ) In the first part of this series, A primer on Jan 2, 2025 · The liquidity provision range for LP narrows, corresponding to the transition from Uniswap v2 to Uniswap v3, but still with only one working range containing all quotes from the considered period. Select the first token drop-down. Nov 10, 2024 · Uniswap v3 revolutionized liquidity provision by introducing the concept ofconcentrated liquidity, enabling LPs to allocate their capital within specific price ranges rather than across the entire (0, infinity) spectrum. October 2023: I will be attending INFORMS and giving two presentations on our work in Welfare-Maximizing Pooled Testing and our work on Strategic Liquidity Provision in Uniswap v3. (The liquidity math in Uniswap v4 is the same as v3. - "Strategic Liquidity Provision in Uniswap v3" Parameter estimates give rise to values µ̂ ≈ −1. We find that providing liquidity in Uniswap V3 is significantly more complex, exemplified by the stark difference in liquidity position returns dependent on their strategies, even within the same pool. 05% transaction fee, our mysterious virtuoso stands to pocket a fraction of the transaction fees contributed by traders who tap into their USDC liquidity. This introduces the problem of finding an optimal strategy for choosing price intervals. 1. Gone are the days of needing multiple research tools for finding DeFi positions. Strategic Liquidity Provision in Uniswap V3 - Free download as PDF File (. The system can't perform the operation now. txt) or read online for free. We model a single LP that faces an exogenous sequence of price changes that arise from arbitrage and non-arbitrage trades in the decentralized exchange. - "Strategic Liquidity StrategicLiquidityProvisioninUniswapv3 Zhou Fan # HarvardUniversity,USA Francisco Marmolejo-Cossio # HarvardUniversity,USA IOG,USA Daniel Moroz # HarvardUniversity Jun 22, 2021 · Uniswap v3 is the largest decentralized exchange for digital currencies. 2 CONCENTRATED LIQUIDITY The defining idea ofUniswap v3 is that of concentrated liquidity: liquidity bounded within some price range. e. Amongst these, constant function market maker (CFMM) DEXs such as Uniswap handle the most volume of trades between ERC-20 tokens. Aug 21, 2023 · As a side note: in my opinion, no research paper has been more harmful to the understanding of concentrated liquidity in the DeFi community than the preprint “Strategic Liquidity Provision in Uniswap v3” from Harvard. When trades give rise to contract prices in this interval, LP assets are swapped according to the v3 curve, which is an affine transformation of the v2 curve and defined to respect the price limits of interval [Pa, Pb]. Uniswap v3 is a noncustodial automated market maker implemented for the Ethereum Virtual Machine. The recurrent structure of the objective’s dependence with respect to the NN parameters, θ ∈ θ allow us to use techniques from recurrent neural networks to compute the gradient of the objective u(W k+1) with respect to θ. 0, 0. Sep 18, 2023 · A deep reinforcement learning (DRL) solution designed to adaptively adjust these price ranges, maximizing profits and mitigating market risks is introduced, which neutralizes price-change risks by hedging the liquidity position through a rebalancing portfolio in a centralized futures exchange. We propose the program For this sequence, we see that price movements at t1 = 2 and t2 = 4 trigger resets, as the shaded bucket escapes the contiguous 2τ + 1 colored buckets. Neuder et al. 2000 oretically analyze the strategic response both from the liquidity providers side and the reward provider side. Fan et al. AFT. Apr 1, 2022 · Decentralized exchanges (DEXs) provide a means for users to trade pairs of assets on-chain without the need for a trusted third party to effectuate a trade. Parkes 25:3 P b P a b a Token A reserves (x)reserves (y) v2 v3 Figure 2 The reserve curve of Uniswap v2 over all prices, and of Uniswap v3 over the price StrategicLiquidityProvisioninUniswapv3 Zhou Fan # HarvardUniversity,USA Francisco Marmolejo-Cossio # HarvardUniversity,USA IOG,USA Daniel Moroz # HarvardUniversity Jun 22, 2021 · Uniswap is the largest decentralized exchange for digital currencies. The number of epochs in the current configuration will also be 1 because we cannot apply the price exiting logic beyond the specified range. Jun 5, 2022 · When Uniswap v3 returns more fees for LPs. What are your thoughts on this behavior? Any other explanations? Want to find out more about Uniswap V3 liquidity provision - read the full research here Jan 18, 2024 · NOTE: _ GP19 has successfully passed the Snapshot vote! 1,800,000 GAL tokens will be allocated for Providing GAL Liquidity on Uniswap V3. The top row corresponds to a low volatility PM , empirically informed from ETH/BTC prices, and the bottom row corresponds to high volatility PM , empirically informed from ETH/USDC prices. Michael Neuder, Rithvik Rao, Daniel J. - "Strategic Liquidity Provision in Uniswap v3" sign, so Uniswap v3 is implemented as an entirely new set of contracts, available here. Rao,andD. 015} in rows from top to bottom. Figure 2 The reserve curve of Uniswap v2 over all prices, and of Uniswap v3 over the price interval [Pa, Pb]. Decentralized Exchanges (DEXs) are new types of marketplaces leveraging Blockchain technology. inducestheproblemofstrategic liquidity provision: Figure 2 The reserve curve of Uniswap v2 over all prices, and of Uniswap v3 over the price interval[P a,P b inducestheproblemofstrategic liquidity provision: Figure 2 The reserve curve of Uniswap v2 over all prices, and of Uniswap v3 over the price interval[P a,P b We find that providing liquidity in Uniswap V3 is significantly more complex, exemplified by the stark difference in liquidity position returns dependent on their strategies, even within the same pool. 99 → 1. The first talk is in the Special Session on Papers from EC (SA74 - "Strategic Liquidity Provision in Uniswap v3" Figure 11 The performance of OIRA and ODRA strategies as we modulate PM and λ. The initial price is $1000 and Bob puts 1 ETH in the pool. Oct 18, 2023 · We formalize the dynamic liquidity provision problem and focus on a general class of strategies for which we provide a neural network-based optimization framework for maximizing LP earnings. Liquidity providers can choose a specific price range in which they want their liquidity The researchers propose a new strategy called Strategic Liquidity Provision (SLP) that is designed to maximize LP earnings by dynamically adjusting the LP allocation over time. Images should be at least 640×320px (1280×640px for best display). of strategic liquidity provision: smaller intervals result in higher concentration of liquidity and Jun 26, 2023 · Liquidity math can get quite overwhelming. For all plots, we use a = 10 for risk aversion and we modulate the (λ̄, α) ∈ {(0. - "Strategic Liquidity Provision in Uniswap v3" Jun 12, 2023 · Bob provides ETH/USDC liquidity on Uniswap v3 1% fee pool, in the price range $1000 to $1100 per ETH. Uniswap v3 position values and payoffs are more tricky to describe mathematically, but the basic intuition is that concentrated liquidity makes all things more extreme, including the non-linearity of the LP value and payoff functions. While different strategies of active liquidity provision exist on Uniswap v3, non-rebalancing liquidity positions remain an important source of liquidity. When scientific notation is used for the y-axis values in certain subplots, it is denoted by a number above the respective y-axis. To our knowledge, this is the first formal study of liquidity provision strategies in Uniswap v3. Do I need to hold both tokens to provide liquidity using Uniswap v3? When providing liquidity using Uniswap v3, you do not need to hold both tokens to provide liquidity. This induces the Uniswap is the largest decentralized exchange for digital currencies. Oct 5, 2022 · Passive liquidity provision (Deposit and Forget) Without taking up a position trading as a full-time investor or professional portfolio manager, it is impossible for a retail investor with a Nov 19, 2024 · The introduction of Uniswap V3 brought significant advancements, most notably the concept of concentrated liquidity. May 5, 2023 · Uniswap v3 is a decentralized exchange (DEX) that allows liquidity providers to allocate funds more efficiently by specifying an active price interval for their funds. Compared to the full range liquidity model Uniswap V2 uses, this allows traders to make larger trades with less price impact. Building a Uniswap v3 Liquidity Provision Backtesting Suite: Authors: Aubin, Christopher: Advisors: Viswanath, Pramod: Department: Computer Science: Class Year: 2023: Abstract: Uniswap is the largest decentralized exchange for cryptocurrencies. The contract price of token A after the trade is P ′ = y′/x StrategicLiquidityProvisioninUniswapv3 Zhou Fan # HarvardUniversity,USA Francisco Marmolejo-Cossio # HarvardUniversity,USA IOG,USA Daniel Moroz # HarvardUniversity Sep 15, 2022 · Credit: “Strategic Liquidity Provision in Uniswap V3” For sure, neither individuals nor protocols can predict future asset price movements. g. The defining idea of Uniswap v3 is concentrated liquidity: liquidity that is allocated within a custom price range. Jun 22, 2021 · Uniswap is the largest decentralized exchange for digital currencies. This induces the Strategic Liquidity Provision in Uniswap v3 Michael Neuder Daniel J. Most closely related is Neuder et al. The upper bound on the amount of token A which can be present in an active bundle for B∗i is given by x̄. (2023a) study the predictable losses of LPs in a continuous- Sep 15, 2024 · In Uniswap V3, liquidity positions are represented by non-fungible tokens (NFTs) instead of ERC20 tokens used in Uniswap V2. Uniswap v3 introduced concentrated liquidity that requires some rebalancing. Strategic Liquidity Provision in Uniswap v3 - Free download as PDF File (. Parkes}, booktitle={Conference on Advances in Financial Dec 7, 2024 · Liquidity on Uniswap v2 can be migrated to Uniswap v3. This induces the Figure 5: An example of the proportional 𝜏-reset strategy, where 𝛼 > 𝜏 . The developed backtester serves as a tool to simulate trading strategies and liquidity provision scenarios, providing a quantitative assessment of potential returns for liquidity providers (LP), and can be further leveraged for strategy enhancement and risk evaluation for LPs operating within decentralized exchanges. 000075)} in columns from left to right. 00005, 0. Apr 1, 2022 · Decentralized exchanges (DEXs) provide a means for users to trade pairs of assets on-chain without the need of a trusted third party to effectuate a trade. They allow users to Discover, filter, and select the best positions – all in one dashboard. Link to previous OP LM Campaign Understanding the returns of liquidity provision on the Uniswap Protocol is important for efficient capital allocation. Scribd is the world's largest social reading and publishing site. Decentralized exchanges (DEXs) are a cornerstone of decentralized finance (DeFi), allowing users to inducestheproblemofstrategic liquidity provision: Figure 2 The reserve curve of Uniswap v2 over all prices, and of Uniswap v3 over the price interval[P a,P b Strategic Liquidity Provision in Uniswap v3, , October/2023. While the price of the asset remains in that interval, the liquidity provider earns rewards proportionally to the amount of liquidity allocated. Some works in the literature study strategic liquidity provision in CFMs and CPMs with CL. 0001,2)\) and a fee tier \(\gamma < 1\). We introduce a new comprehensive and model-free measure for the unhedgeable and predictable loss (PL) incurred by liquidity providers (LPs) in constant function The introduction of Uniswap V3 brought significant advancements, most notably the concept of concentrated liquidity. October 2023: I will be attending AFT '23 to present "Strategic Liquidity Provision in Uniswap v3 ". Select the first token you want to add liquidity with. Uniswap is the largest decentralized exchange (DEX) and one of cornerstones of Decentralized Finance (DeFi). With each version introducing key innovations, from the addition… The largest DEX measured by trading volume, Uniswap V3, promises a DEX design optimized for capital efficiency. In this case, the middle five bins are part of both 𝐵𝛼 and 𝐵𝜏 sign, so Uniswap v3 is implemented as an entirely new set of contracts, available here. Understanding the returns of liquidity provision on the Uniswap Protocol is important for efficient capital allocation. Sep 18, 2023 · View a PDF of the paper titled Adaptive Liquidity Provision in Uniswap V3 with Deep Reinforcement Learning, by Haochen Zhang and Xi Chen and Lin F. The next-price probability distribution is shown in blue. You can claim separately wi How to remove liquidity from Uniswap v3 provides increased capital efficiency and fine-tuned control to liquidity providers, improves the accuracy and convenience of the price oracle, and has a more flexible fee structure. 005, 0. Jan 9, 2024 · AFT 2023 Session 7: DeFiChair : Pramod ViswanathSpeaker: Francisco MarmolejoPaper Title: Strategic Liquidity Provision in Uniswap v3Authors: Zhou Fan (Harvar By sidestepping the standard 0. 4230/LIPIcs. 2 Outline Section 2 introduces the Uniswap v3 protocol and introduces the Uniswap v3 is the largest decentralized exchange for digital currencies, and allows a liquidity provider (LP) to allocate liquidity to one or more closed intervals of the price of an asset. Moroz Rithvik Rao David C. Skip to search form Skip to main content Skip to account menu May 4, 2022 · In earlier versions of AMMs, e. (2022) discuss the tradeoff between risks and returns that LPs face in Uniswap v3,Cartea et al. fifuc npgslvl hufhfkks nia coimdc deynk ymkcnmq tsstf rkyslre fzjrkac