1. Sorbetto Fragola of @PopsicleFinance is out!
A lot of people are asking me about how it works, so decided to write a thread about it! I'll try to explain as easy as i can!
Let's start!
$ICE
A lot of people are asking me about how it works, so decided to write a thread about it! I'll try to explain as easy as i can!
Let's start!
$ICE
2. As many of you know, @Uniswap launched its v3 solution around 3 months ago. The difference between v2 and v3 is basically "concentrated liquidity".
v2 was easy to understand, easy to use as it uses x*y=k formula. But there is a problem with that, it's inefficient.
v2 was easy to understand, easy to use as it uses x*y=k formula. But there is a problem with that, it's inefficient.
3. In v2, the liquidity is same around all price ranges. But why should i provide liquidity for 2M$ for ETH when the price is 2000$?
And can we really fight the old school orderbook trading with this approach?
And can we really fight the old school orderbook trading with this approach?
4. To address these issues, v3 was launched.
You can determine your price range, and the narrower your price range is, the more fees you accumulate.
This way, liquidity is concentrated to allow traders to experiment lower slippage and lower price impacts.
You can determine your price range, and the narrower your price range is, the more fees you accumulate.
This way, liquidity is concentrated to allow traders to experiment lower slippage and lower price impacts.
5. All sound good, but what is the problem or risk with v3?
If you are out of the range, you'll experiment impermanent loss on steroids.
As in the video below, your asset percentage differs based on the range you have.
If you are out of the range, you'll experiment impermanent loss on steroids.
As in the video below, your asset percentage differs based on the range you have.
6. For example, if you provide $ETH / $USDT in the range of 2000$/2100$, when ETH price goes up more than 2100$ , you are left with only USDT.
Or if ETH price goes belower than 2000$, you only left with ETH.
LPs always have lesser amount of better performing asset.
Or if ETH price goes belower than 2000$, you only left with ETH.
LPs always have lesser amount of better performing asset.
7. But the upside is too huge that you can take that into account, as the narrower the range, fees go up too much.
8. In short:
- You want to provide liquidity in a narrower range.
- You don't want price to be out of your range.
But it's very hard to monitor the ranges, as you have to check it everyday. And even if you do, you have to sleep at some point.
info.uniswap.org/#/pools/0x4e68…
- You want to provide liquidity in a narrower range.
- You don't want price to be out of your range.
But it's very hard to monitor the ranges, as you have to check it everyday. And even if you do, you have to sleep at some point.
info.uniswap.org/#/pools/0x4e68…
9. If ETH dumps or pumps while you are sleeping, you are out of range again. Also don't forget that you have to pay gas fees to rearrange your position.
What if there was a protocol that monitors those ranges, choose and automatize it for me?
Meet Sorbetto Fragola!
What if there was a protocol that monitors those ranges, choose and automatize it for me?
Meet Sorbetto Fragola!
10. You put you tokens in the protocol, and it does the work for you!
Don't forget that it's very different than the old 50:50 pools!
You have to provide tokens at the same rate the @PopsicleFinance 's pool has.
Don't be surprised if you put smt like 0.6 ETH and 10000$
Don't forget that it's very different than the old 50:50 pools!
You have to provide tokens at the same rate the @PopsicleFinance 's pool has.
Don't be surprised if you put smt like 0.6 ETH and 10000$
11. Currently both USD/ETH pools have more than %200 APR!
And as i tweeted before, you can also check @Ceazor7 's video to learn how to do it!
Also don't forget that these are all experiments, and DYOR!
Thank you for reading, as always!
And as i tweeted before, you can also check @Ceazor7 's video to learn how to do it!
Also don't forget that these are all experiments, and DYOR!
Thank you for reading, as always!
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