1/
Providing liquidity entirely above or below the market price in @Uniswap v3 can be used for both profit-taking and limit orders, while still earning trading fees in the process.
How does this work?
Providing liquidity entirely above or below the market price in @Uniswap v3 can be used for both profit-taking and limit orders, while still earning trading fees in the process.
How does this work?
2/
If ETH is at $2500 and you want to take profits as it rises to $3000 simply deposit your ETH to the range of $2500-$3000 on an ETH/DAI (or USDC, etc) pair
At $2500 your position be 100% ETH and convert to DAI as it rises in value until it is fully converted at $3000.
If ETH is at $2500 and you want to take profits as it rises to $3000 simply deposit your ETH to the range of $2500-$3000 on an ETH/DAI (or USDC, etc) pair
At $2500 your position be 100% ETH and convert to DAI as it rises in value until it is fully converted at $3000.
3/
How much fees will be earned?
Depends on how much trading occurs in that price range. But it will provide liquidity with more than 22x the efficiency of a traditional v2 position between 0 and infinity
See this thread for more insight:
How much fees will be earned?
Depends on how much trading occurs in that price range. But it will provide liquidity with more than 22x the efficiency of a traditional v2 position between 0 and infinity
See this thread for more insight:
https://twitter.com/haydenzadams/status/1380217938867843072
4/
What price will this trade execute at?
The average execution price of a range order is the geometric mean between the starting and ending price.
So, before fees, an LP would receive an execution price of:
sqrt(2500*3000) = $2739 for their ETH
What price will this trade execute at?
The average execution price of a range order is the geometric mean between the starting and ending price.
So, before fees, an LP would receive an execution price of:
sqrt(2500*3000) = $2739 for their ETH
5/
Profit-taking range orders are an incredibly cool design space.
They allow you to plan and commit to a profit taking strategy in advance, and earn feels while doing so.
In more narrow ranges they can also be used to mimic a limit order.
Profit-taking range orders are an incredibly cool design space.
They allow you to plan and commit to a profit taking strategy in advance, and earn feels while doing so.
In more narrow ranges they can also be used to mimic a limit order.
6/
For example, add ETH to the range of $2500 to $2515
if the price of ETH rises from $2500 -> $2515 100% of your ETH will have converted to DAI at an average rate of ~$2507
You will also earn a minimum of 0.3% of the ETH deposited in fees, but likely more.
For example, add ETH to the range of $2500 to $2515
if the price of ETH rises from $2500 -> $2515 100% of your ETH will have converted to DAI at an average rate of ~$2507
You will also earn a minimum of 0.3% of the ETH deposited in fees, but likely more.
7/
🤯 In this narrow of a range, your range/limit order will provide liquidity with ~670x the capital efficiency of v3
🤯 In this narrow of a range, your range/limit order will provide liquidity with ~670x the capital efficiency of v3
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