Hello frens,
We have three lessons to learn today about deploying Uniswap v3 pools. Learn these lessons and you will become a more efficient pool operator. As a reminder, none of this is financial advice - it is a personal study on what works well and what works poorly on Uniswap v3.
The first step to take in deploying capital into a Uniswap v3 pool is deciding which token pair. There are a few factors that are important to consider when choosing tokens, and we’ll go over them below.
And before we even choose which tokens, we need to ensure we know exactly why we are creating a v3 pool. What makes a v3 pool on Uniswap a better choice than putting a token pair into Sushiswap, or any other AMM like it?
Namely, it is this: using Uniswap allows us to create discrete LP positions in price bands we choose, which increases our ability to tactically deploy capital.
Here we can set our min and max price for a DAI/ETH pool, and also see where others have deployed their capital. All things equal, we want to find zones where others have deployed little to no capital. Those tall blue skyscrapers are where capital is concentrated and will not make us as much money. Ideally we’d want to deploy where there is zero capital and own 100% of that price range.
You can read more about how Uniswap’s concentrated liquidity is an advantage over other AMMs on their blog.
Lesson One - All things equal, deploy your capital in areas where there is less liquidity.
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