Crypto Exchange Crypto Exchange
Ctrl+D Crypto Exchange
Home > ETH > Info

Uniswap v3 capital efficiency has achieved initial results, what opportunities does the LP asset management track have?



Editor’s note: This article compares the capital efficiency of v2 and v3 by visualizing the recent liquidity trading volume data, and can clearly see the improvement of v3’s capital efficiency; due to the centralized liquidity characteristics of v3, market making needs to be more specialized From this, we can expect the outbreak of the active-zce market-making strategy track based on Uniswap v3 in the future. At the same time, we also briefly introduced the current projects on the track in the market: Visor Finance, Alchemist, Charm, Method Finance, Lixir Finance. On May 5, Uniswap v3 was successfully launched on the Ethereum mainnet. The core goal of Uniswap v3 is to solve the problem of "capital efficiency", trying to increase the capital efficiency of v3 by 4,000 times compared with v2, so as to realize the investment of the same amount of funds to earn more fees, thereby obtaining higher capital returns. The actual performance of v3 since its launch has given us a satisfactory answer. Let's first compare the trading volume and share of v2 and v3 during the period from May 5 to 15: Hourly trading volume comparison chart of Uniswap v2 vs v3 | Source: Hourly trading volume of Uniswap v2 vs v3 Volume share comparison chart | Source: Dune Analytics From the above two pictures, we can see: Data: Uniswap’s total lock-up volume once exceeded Curve: On July 24th, the data analysis platform IntoTheBlock issued an article stating that Uniswap is competing with Curve for the DeFi field dominant position. Uniswap's total locked-up volume (TVL) briefly surpassed Curve in the past week, becoming the DEX with the highest TVL in the DeFi field. Data shows that on July 19, Uniswap TVL reached US$5.93 billion, while Curve TVL was US$5.85 billion. On July 20, Uniswap TVL was $5.87 billion, while Curve TVL was $5.86 billion. Previously, Curve was the top DEX in TVL ranking for more than a year. IntoTheBlock pointed out that Uniswap’s TVL has risen 24% since the beginning of May this year, while Curve TVL has fallen 69%. Curve has regained the top spot, but the numbers are still close. The latest data shows that Curve TVL is $6.12 billion and Uniswap TVL is $6.09 billion. Additionally, Uniswap’s daily trading volume is now almost on par with Coinbase, according to Clara Medalie, head of research at crypto data provider Kaiko. (The Daily Hodl) [2022/7/24 2:34:26] 1. Although v3 has just launched, its transaction volume has grown rapidly; 2. Even during the hour from 21:00 to 22:00 on May 12, the transaction The volume has surpassed, and the follow-up trading volume share is basically stable between 35% and 50%. Next, let’s count the total locked value TVL and daily total trading volume of v2 and v3 during May 10-15 , and divide the two to get capital efficiency. Data: Uniswap V3 has occupied 41% of the market share in just 2 months: Messari analyst Ryan Watkins said on Twitter that Uniswap V3 is encroaching on the decentralized trading market. Just two months after its launch, it has a 41% market share and shows no signs of slowing down. This data includes volume from DEXs other than Ethereum, including volume on BSC and Polygon. [2021/7/9 0:39:02] From the above two figures, we can know: 1. Although the total lock-up value of v3 is only about 10% of that of v2, the capital efficiency of v3 is significantly higher than that of v2. Improvement; 2. Judging from all trading pairs, the current capital efficiency of v3 is about 4 times that of v2; many small partners may sigh, didn't Uniswap officials say that the capital efficiency will increase by 4000 times? This gap is too big! That’s right. In the above example, our sample objects are all trading pairs. The price fluctuation range of most trading pairs is still very large, so capital efficiency will be affected. If we use a more stable trading pair pool as a sample object, such as the stablecoin trading pair DAI/USDC, it is more likely to provide liquidity within a narrow range, thereby greatly improving capital efficiency. Now, let's choose May 13th to compare the capital efficiency of the trading pair DAI/USDC in v2 and v3: UNI circulation is remarked, and the market value has already ranked eighth in the list: According to Coingecko data, the market value of UNI circulation It reached 14.5 billion U.S. dollars, with a 24-hour increase of more than 22%, ranking eighth on the list. Its current supply is 519 million. During the same period, the price of UNI rose by only 1.94%. In this regard, Bobby Ong, founder of Coingecko, said, "We noticed that some addresses had expired and UNI tokens had been distributed, but they were not updated due to some outlier checks. We updated some things so that the circulating supply and circulating market value Jump up. [2021/3/6 18:21:46] Obviously, when we use stable currency trading pairs to measure, the capital efficiency is increased to hundreds of times. Maybe some friends will still be curious, it is not thousands of In fact, there are several factors that will affect capital efficiency. Take the above example: the transaction in the v3 pool will affect the concentrated price range; whether the price range set by LP can accurately match the current transaction Demand range; due to the comparison between the two, the TVL of v2 and v3 is also a great interference factor affecting the calculation results. Since v3 has just been launched, the market makers of v3 may not have figured out this way of playing, so the currently handed over This answer sheet is actually satisfactory. "V3 brings difficulties to market makers" We said above: What kind of gameplay does it refer to? It should be known that the launch of v3 has transformed the original passive liquidity supply without price range of v2 into the active-zce liquidity supply of v3 with price range. How do you understand it? v2 Ways to provide liquidity Uniswap, BlockFi, etc. join the Blockchain Association: Jinse Finance reported that the cryptocurrency and blockchain advocacy organization Blockchain Association (Blockchain Association) announced the addition of 5 new members, bringing the total number of members to 30 . New members include Uniswap, BlockFi, Fireblocks, CMT Digital, and Blockchain Capital. [2021/1/29 14:16:44] When v2 provides liquidity, the liquidity will be evenly distributed along the price curve, that is to say, the funds you provide are evenly distributed at each price for market making, but we know that The price of most tokens is concentrated in a certain range for most of the time, which makes the capital efficiency very low. For example, Uniswap’s DAI/USDC pool only spends around 0.5% of its funds on trades between $0.99 and $1.01, as the vast majority of volume takes place in this price range. This is also the volume at which LPs earn most of their transaction fees. At this time, 99.5% of the funds distributed at other price levels are almost never used. However, this market-making method is similar to "fool-style" market-making. LPs only need to deposit funds into the pool, and finally obtain pool fee income according to the proportion of funds. Centralized liquidity in v3 In v3, LPs can choose a custom price range when providing liquidity, allowing funds to be concentrated in the range where most trading activity occurs. Yes, v3 market makers need to choose a custom price range. Although it sounds simple, if the price range is set unreasonably, it will greatly affect the market-making income of LP. In addition, if The market fluctuates greatly, the price changes beyond the price range of LP, the market re-making issues that market makers need to carry out, and whether to establish long positions (that is, provide liquidity in multiple price ranges) and other market-making combination strategies. Liandou Capital invested tens of millions in Bat Finance CoinEcho Union PTE. LTD: Liandou Capital announced to invest in Bat Finance CoinEcho Union PTE. LTD, with an investment amount of tens of millions. Bat Finance and mainstream financial media have correctly interpreted national policies, gathered the opinions of industry leaders, created professional video media services, established a credible blockchain financial ranking list, and is committed to serving blockchain products and companies with investment value. Air coins and value coins protect investors in small and medium coin circles. [2018/6/2] Is the head too big? In fact, to put it simply, it is the question of how to maximize market-making profits. Of course, for ordinary investors, this is too brain-intensive and too professional! And professional things should be left to professional people to do! Therefore, we can foresee that as the TVL of Uniswap v3 continues to grow, there will be a new track: an active-zce market-making strategy project based on Uniswap v3. "Active market maker strategy track based on Uniswap v3" wrote in the Uniswap v3 white paper: We hope that mature strategies can be tokenized so that LPs can participate while the user experience remains unchanged. It involves multi-position management, automatic balance of liquidity according to market prices, reinvestment of handling fees, rewards, etc. Starting from v3, Uniswap encourages other teams to create applications for its liquidity pool. Of course, this business is also a big piece of cake. There are already some projects that are working on the development of this business, such as: Visor Finance (VISR) Alchemist ( MIST) Method Finance (MTHD) Lixir Finance (LIX) Visor Finance Simply put, Visor enables DeFi participants to use an NFT Smart Vault to provide liquidity and actively manage liquidity on Uniswap v3. The first step in using Visor is to create your own NFT smart vault, which is equivalent to a self-custodial contract vault controlled by the user and owned by the user. Users can transfer their own assets (v3 LP NFT, etc.) Deposit it, because it is an NFT asset, using Visor mining can achieve many operations only through signed transactions, which can greatly save transaction fees, and users can safely interact with the DeFi protocol without giving up custody . Visor consists of three components: 1. Visor Vault: the NFT smart treasury that users self-host and control. 2.Hypervisor: Compatible Smart Pool smart contracts that can interact with the Visor Vault and its funds. For example, if a user participates in mining rewards, the Hypervisor can read the funds in the Visor Vault, and the funds can be rewarded without leaving the personal smart pool. Moreover, the same Visor Vault can participate in multiple similar mining at the same time, and obtain rewards from multiple mining pools at the same time, thereby improving capital efficiency. 3.Supervisor: A smart contract with Hypervisor control authority. Supervisor can update Hypervisor preset parameters to manage assets and enforce policies. For example, the price range of the flow can be adjusted, and the reinvestment ratio of fee incentives can be adjusted. After May 19th, Visor's products for Uniswap v3 may be launched. According to the official introduction, Visor will provide three main functions at that time: self-hosted mining, reward fee accumulation and time lock. 1. Deposit Uniswap LP NFT into Visor Vault to get liquidity rewards. Users pledge LP NFT, and the project can reward liquidity through the Hypervisor according to a predetermined transaction range or certain preset strategies. 2. In Uniswap v2, the fee rewards obtained by LPs will be automatically added to the fund pool as liquidity. However, in v3, the fee will not be automatically deposited into the fund pool, but will be used as a separate token. Hypervisors can manage such income-generating assets. 3. The Visor Smart Pool allows users to Time-Lock their LP NFT, which prevents the risk of withdrawing from the pool and running away. Alchemist Alchemist has no "development team", no company, no roadmap, it is a magical existence. The functions of Alchemist that can be learned from public information are: 1. NFT LP treasury 2. Gas-free transactions 3. The treasury automatically provides liquidity across different protocols. At present, the community expects that Alchemist may have related asset management products about Uniswap v3 LP NFT in the future, specifically Still need to look at possible future reveals of this mysterious project. Charm Charm is actually a decentralized options protocol based on Ethereum, but recently it launched AlphaVaults, a passive market-making strategy tailored for Uniswap v3, on the mainnet. AlphaVaults can be used to automatically manage the liquidity of Uniswap v3, allowing it to concentrate liquidity to obtain higher returns, and to rebalance regularly to reduce impermanent losses. At present, AlphaVaults has only launched the WETH / USDC treasury. Users can directly deposit token pairs of equivalent value without setting the price range by themselves. The treasury strategy will automatically adjust the range of orders as the price fluctuates to maximize revenue.


Kusama parachain auction is coming soon Edgeware launches parachain Hedgeware

Since last year, the Polkadot ecosystem has experienced rapid development.

The floating profit exceeds 15 billion U.S.dollars.This Dogecoin address may be related to Musk

Four months ago, some members of the Dogecoin community began to notice the address DH5yaieqoZN36fDVciNyRueRGvGLR3mr7L because the number of Dogecoins held by it exceeded 1/4 of the total amount. It also surpassed $23.

Golden Outpost | Musk proposes to form a Bitcoin mining committee

The Chinese government has recently announced that it will crack down on Bitcoin mining and transactions. People are worried that Bitcoin computing power will eventually be de-Chinese.

Uniswap v3 capital efficiency has achieved initial results, what opportunities does the LP asset management track have?

Editor’s note: This article compares the capital efficiency of v2 and v3 by visualizing the recent liquidity trading volume data.

Chief Investment Officer of Arca: Why Sushi is Seriously Undervalued

Recently, Jeff Dorman, chief investment officer of Arca, tweeted about why sushi is undervalued, and Mars Finance compiled it for readers. Interestingly, in November last year.

Why Are Professional Investors Adopting DeFi Faster Than Bitcoin?

Professional investors are “getting” DeFi much faster than they can get Bitcoin (or Ethereum). This is not conjecture; it is fact. As the CIO of Bitwise Asset Management.

The immeasurable plunge makes traders wonder? SBF sorted out five possible reasons but admitted frankly: "Unpredictable"

Following the May 19 crash, the crypto market continued to fluctuate and fall on the 23rd. Senior traders analyzed the possible reasons for this decline.Since the middle of 2019.