Earn yield while placing a limit buy order?
Simplfying uniswap V3
Want to buy ETH at 800?
why not earn free yield while setting a limit buy order?
Simplfying uniswap V3 for trader with target price range.
❓How does uniswap v3 work
Uniswap v3 is concentrated liquidity
meaning u can set a range to provide liquidity towards a pair
anything below current ETH price u provide USDC as liquidity
anything above current ETH price u provide ETH as liquidity
⬆️ if the prices goes up it sells ur eth to usdc
⬇️ if the price goes down it buy eth with ur usdc
U earn the trading fee when the price is within ur range
When u go out of range.
Price moved up - all USDC
Price moved down - all ETH
Ok now u understand the basic theory
lets know see how u apply it!
1️⃣ Sell ETH at ur target price + earn yield
Current ETH price 1721
U are holding eth and u want to sell ETH at 1850
U can set an out of range LP on 1800 -1900
if price goes 1900
will have sold all ur eth at 1850 (avg of ur LP range)
+
yield
u will earn trading fee whenever the price is within 1800-1900
ideally u want it to bounce around a few times with high trading vol then finally reach ur 1900 range!
Once it hit, u can decide do u want to unwind the LP position
like my TA?
2️⃣ Buy ETH at ur target price + earn yield
Current ETH price 1716
U are holding USDC and u want to buy ETH at 1630
U can set an out of range LP on 1613 -1649
if price goes 1613
will have use all ur USDC to buy eth at 1631 (avg of ur LP range)
+
yield
u will earn trading fee whenever the price is within ur range
ideally u want it to bounce around a few times with high trading vol then finally reach final "buy" range
Once it hit, u can decide do u want to unwind the LP position, so u will be holding ETH only and let it pump
3️⃣ Earn yield if u think the price will bounce in ur target range
If u it is a crab market and will bounce around this range then u can within ur price range.
The downside of this will be if u are wrong, u will either sell ur ETH holding or end up buying too much eth
This is basically betting on sideways market with a "tighter" range because of ur view towards the market so u can earn more yield as ur capital is more concrentrated within ur target range, hence better capital efficiency
📍Summary
This is a quick n simple approx into uniswap v3 yield farming
personally i think this is more "trading" as u can see
1️⃣ 2️⃣ 3️⃣ does require u to have a "target price" hence it never been that retail user friendly as in a way it has more dimension than V2
Hope u this learn something n weren't too simply for u.
in the following weeks i will dive into more different v3yield farming strategies.
As this is a big topic i will break it down into a few threads so its more digestible for more people.
do share any feedback or request!
I know learning & reading in the bear market with out winning a lot of money is hard, but we know this is the right way.
Hence i started trying to make gif memes for u guys now.
Not because i like making memes, 100%
Great content, and love the memes Lambroz 🤙
Have recently been experimenting with LPing on V3 with the aim to get some yield on my ARB bag, have been playing in 0.3, 0.05 ETH/ARB pools
uniswap.fish has been helpful in identifying pools with good fees
Strategies 1 + 2 are great alternatives to limits on CEX's, do you use a third party to automate pulling you liquidity off Uni?
Strategy 3 - agree with you that concentrated liquidity make this a lot more like trading. We know most traders end up rekt. And looking at the numbers, most V3 LP's are getting rekt by IL and are better off hodl
So weird man, I was just thinking about doing this today. In the past I’d use a cex and just set a ton of limit orders but the past 2 years I’ve been living 100% on chain. Today I started brainstorming ways to best DCA with low to zero fees. So far I’ve come up with using a TWAMM and using UNIV3. I’ve never really LPED with V3 though. You can provid single sided liquidity into univ3? If I wanted to buy ETH, it will let you enter with just ETH?