Concentrated Liquidity Analysis in Uniswap V3

doi:10.1145/3560832.3563438

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Concentrated Liquidity Analysis in Uniswap V3

Published Nov 7, 2022 · Saleh Hashemseresht, Mohsen Pourpouneh

Proceedings of the 2022 ACM CCS Workshop on Decentralized Finance and Security

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Abstract

Uniswap V3 is one of the most successful decentralized exchanges for digital cryptocurrencies. The latest version of the Uniswap (V3) introduces a number of new features, notably the concentrated liquidity that allows the liquidity providers to add liquidity within a specific price range. In this paper, we analyze the effect of concentrated liquidity on the return of the liquidity providers and present an approximation for the expected fees and the impermanent loss of a liquidity provider. First, we provide analytical results and then verify them using simulations.

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Key takeawayConcentrated liquidity in Uniswap V3 increases the return for liquidity providers, but may cause impermanent loss due to the limited price range.

PopulationOlder adults (50-71 years)

Sample size24

MethodsObservational

OutcomesBody Mass Index projections

ResultsSocial networks mitigate obesity in older groups.

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Concentrated Liquidity Analysis in Uniswap V3

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