Maximizing Profits on Uniswap V3: 21 Popular Pools LPed

How some of the most popular Uniswap Pools fared when using this simple strategy

We simulated LP performance for 21 popular Uni V3 pools (high TVL & volume).

Results were surprising: 📢 LPs can be profitable!

• 💰 Which pools made the most?

• 📏 Are narrow or wide ranges better?

Find out 🧵

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Previously, we explored the ETH-USDC 30bps pool. For this study:

• 🗓️ Jun 2021 - Jan 2023 (20 months) for most pools

• ⚖️ Daily rebalancing

• 📏 Narrow (r = 1.05) & wide (r = 1.75) ranges

Here's how other ETH-stablecoin pools compare👇

Panoptic @Panoptic_xyz

1/12 We analyzed simulated LP performance on ETH-USDC 0.3% pool. Results were surprising: 📢 The optimal width was wider than expected. • What's the optimal width for max returns? • How does that change for 🐂 vs 🐻 markets? Find out 👇

Bad pools 😔 (but can you spot the good pool 🐶?)

• ETH-USDC (5bps): -18%

• ETH-DAI (30bps): -14%

• ETH-USDC (30bps): -12%

• ETH-USDT (30bps): -11%

• ETH-USDC (100bps): -9%

• ETH-USDC (1bp): -6%

• ETH-USDT (5bps): -3%

• ETH-DAI (5bps): +7%

(Returns in stablecoin)

We lump some pools together and slap the label "L1/Utility Tokens" on 'em (see legend 👇 for pool details)

Good pools:

• 😊 $MATIC (+66%, narrow)

• 😍 $LINK (+101%, narrow)

• 🤩 $ENS (+124%, narrow)

Bad pools:

• 😦 $WBTC (+2%, wide)

• 😢 $GNO (-1%, wide)

• 😭 $BTT (-28%, wide)

Now for DeFi.

Good pools:

• 🙂 $MKR (+9%, narrow)

• 😎 $1INCH (+14%, narrow)

Bad pools:

• 😕 $AAVE (-7%, narrow)

• 🙁 $UNI (-28%, narrow)

And NFT/Meme tokens???

Good pools:

• 😅 $APE (+28%, narrow)

• 🤣 $HEX (+209%, wide)

Bad pools:

• 😶 $LOOKS (-4%, narrow)

For ERC20-ETH pools, returns are in ETH. Even if we earn 209% in ETH, if ETH price in $ is falling, we might lose in terms of $. But you can always hedge by shorting ETH! (Panoptic sooon!)

(What if we calculated returns in the ERC20 token...future #ResearchBites? 😉)

Panoptic @Panoptic_xyz

1/18 Read our latest: #ResearchBites from @brandonly1000 of the @Panoptic_xyz research team! ===== How to hedge ANYTHING (including UniV3 LP positions) with options 👇

Key Insights:

• 💀 7/8 ETH-stablecoin pools underperformed (too popular?)

• 🏆 8/13 ERC20-ETH pools outperformed (not enough ❤️)

Common traits for outperforming strategies:

• Narrow LP range

• Minimal pool price change

• ⬆️ Volume ⬇️ TVL

Caveats:

• ⛽ Ignores gas/slippage/swap fees

• 📈 Assumes fees/returns compound day-over-day

• ⚠️ Past performance is no guarantee of future results!

Question:

• 🐂🐻 What if we LP with bullish or bearish bias? (Future #ResearchBites 😉)

Guillaume Lambert | gee-yohm.eth | 🦇🔊 @guil_lambert

I've created a couple of flowcharts to help beginners deploy+manage their @Uniswap v3 liquidity position. •Part 1: Choosing a size+range for a given holding timeline –eg. 1d, 1w, 1 mo, 1y? •Part 2: Managing LP positions via daily checks –ie. when to exit position+take profits

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Disclaimer:

• 📢 None of this should be taken as financial advice.

• ⚠️ Past performance is no guarantee of future results!