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V3 (coming soon)

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Last updated 9 months ago

V3 liquidity provision introduces advanced features and customization options, providing liquidity providers with greater control and flexibility. Here's what you need to know about V3:

Overview

V3 liquidity provision allows liquidity providers to concentrate their liquidity within customizable price ranges, optimizing capital efficiency and minimizing impermanent loss.

Key Features

  1. Concentrated Liquidity: Liquidity providers can specify price ranges within which they want to concentrate their liquidity, allowing for more targeted market-making strategies.

  2. Fee Structure: Similar to V2, liquidity providers earn a share of the trading fees generated by the liquidity pool, with 0.4% of the fees allocated to liquidity providers on Swamps DEX.

  3. Capital Efficiency: V3 aims to optimize capital efficiency by enabling liquidity providers to focus their liquidity provision within specific price ranges where they anticipate more trading activity.

Considerations

  • Complexity: V3 liquidity provision introduces additional complexity compared to V2, requiring liquidity providers to manage price ranges effectively to minimize risks.

  • Potential for Higher Returns: Despite the complexity, V3 offers the potential for higher returns for liquidity providers who can effectively manage their positions within customizable price ranges.

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