Uniswap wallet

UNISWAP PROTOCOL Swap, earn, and build on the leading decentralized crypto trading protocol.

Concentrated Liquidity

In Uniswap v2, liquidity is distributed evenly along an x*y=k price curve, with assets reserved for all prices between 0 and infinity. For most pools, a majority of this liquidity is never put to use. As an example, the v2 DAI/USDC pair reserves just ~0.50% of capital for trading between $0.99 and $1.01 , the price range in which LPs would expect to see the most volume and consequently earn the most fees.

V2 LPs only earn fees on a small portion of their capital, which can fail to appropriately compensate for the price risk ("impermanent loss") they take by holding large inventories in both tokens. Additionally, traders are often subject to high degrees of slippage as liquidity is spread thin across all price ranges.

In Uniswap v3, LP's can concentrate their capital within custom price ranges, providing greater amounts of liquidity at desired prices. In doing so, LPs construct individualized price curves that reflect their own preferences.

LPs can combine any number of distinct concentrated positions within a single pool. For example, an LP in the ETH/DAI pool may choose to allocate $100 to the price ranges $1,000-$2,000 and an additional $50 to the ranges $1,500-$1,750.

By doing so, an LP can approximate the shape of any automated market maker or active order book.

Users trade against the combined liquidity of all individual curves with no gas cost increase per liquidity provider uniswap wallet. Trading fees collected at a given price range are split pro-rata by LPs proportional to the amount of liquidity they contributed to that range.