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HOW TO PROVIDE LIQUIDITY ON UNISWAP V3

Liquidity Provider positions are represented by NFT on Uniswap v3, whenever someone does a swap, they pay a small fee to the pool. A portion of that fee goes to all the liquidity providers. So you can earn passive income from trading fee

Whereas Uniswap v2 required all users to provide liquidity across the entire price curve from 0 to infinity, Uniswap v3 allows Liquidity Providers (LPs) to optionally concentrate capital in the price range they believe will generate the highest return.

To provide liquidity on Uniswap V3 follow these steps:

  1. Select a pair
    BRE – ETH Pair: https://app.uniswap.org/#/add/ETH/0xfffB7488aB5DdDe106B5BeF56e7c179700509842/3000
  1. Review Fee Tier
  • 0.05% fee tier: Best for stable pairs
  • 0.3% fee tier: Best for most pairs
  • 1.0% fee tier: Best for exotic pairs, where LPs take on extreme price risk

=> For BRE-ETH Pair recommend 0.3% fee for best effect

  1. Set Price Range
  • When making a price range decision, you should consider the degree to which you think prices will move over the course of your position’s lifetime. You should also consider your willingness to actively manage the position as the market evolves, and the economics of transactions required to actively manage a position.
  • If the price moves outside your specified range, then your position will be concentrated in one of the two assets and not earn trading fees until the price returns to their range.
  • Instead of picking a price range, you can provide liquidity across the Full Range like in Uniswap v2 by clicking the Full Range button. However, please note your rate of return will be significantly lower than a similar position with a more narrow price range.
  1. Deposit Amounts
  • It is not necessary to target a 50/50 ratio though some strategies may choose that ratio.
  • You can adjust your ratio by sliding the price range left-right along the chart or dragging the min or max price boundary.
  • The deposit amount that you typed in will remain fixed, while the second asset amount will adjust to the new ratio based on your new price range.
  • If you select a price range that does not include the current market price, then you’ll only need to provide a single asset instead of both.
  1. Approve and Add
    Finally, Once that transaction confirms, your assets now providing liquidity to Uniswap traders and your position is earning fees. You can monitor and manage your position on the Pool page

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