V3 (coming soon)
Last updated
Last updated
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
Concentrated Liquidity: Liquidity providers can specify price ranges within which they want to concentrate their liquidity, allowing for more targeted market-making strategies.
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.
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.
