I will show you how to add concentrated liquidity on Uniswap v3 on Polygon chain with lowest fees. I will show you how to make 20% APY on stablecoin pairs to have your crypto stack grow during crypto downturn.
What is Uniswap?
Launched inn November 2018, Uniswap v1 was as a proof of concept for automated market makers (AMMs), a type of decentralized exchange where anyone can pool assets into shared market making strategies.
In May 2020, Uniswap v2 introduced new features and optimizations, setting the stage for exponential growth in AMM adoption. Under 1 year, Uniswap v2 has facilitated over $135 billion in trading volume, ranking as one of the largest cryptocurrency spot exchanges in the world.
With launch of Uniswap v3, L1 Ethereum mainnet launch on May 5 2022, with an L2 deployment on Optimism followed sortly.
Uniswap V3 Key Features:
Concentrated liquidity, giving individual LPs granular control over what price ranges their capital is allocated to. Individual positions are aggregated together into a single pool, forming one combined curve for users to trade against.
Multiple fee tiers, allowing LPs to be appropriately compensated for taking on varying degrees of risk
These features make Uniswap v3 the most flexible and efficient AMM ever designed:
LPs can provide liquidity with up to 4000x capital efficiency relative to Uniswap v2, earning higher returns on their capital.
Capital efficiency paves the way for low-slippage trade execution that can surpass both centralized exchanges and stablecoin-focused AMMs.
LPs can significantly increase their exposure to preferred assets and reduce their downside risk.
Uniswap v3 also has higher market depth across all price levels, which means it’s even more advantageous for users to execute larger trades on Uniswap v3 relative to centralized exchanges.
LPs can sell one asset for another by adding liquidity to a price range entirely above or below the market price, approximating a fee-earning limit order that executes along a smooth curve. Click on Remove Liquidity. You can remove increments of 25% or any amount in between. If I pick MAX I will get 441.2 MATIC and 277.3 CRV. I deposited 449 MATIC tokens. This is less than 8 MATIC tokens. This is called impermance loss. I am not planning on withdrawing my MATIC-CRV pool anytime soon. I will be holding until next bull cycle in April 2024 bitcoin halving event. Until then I want to be earning more MATIC and CRV as rewards. Only thing I will doing every few days or weeks is adjust my range when my liquidity is off the range.
Buying Bitcoin Without Fees from Strike App
You can buy Bitcoin from Strike App without any fees. You heard it right-- there is no fees to buy Bitcoin with fiat (in my case USD) in Strike app. I will provide links below to Strike App signup if you do not have one. Strike App you need to do KYC (Know-Your-Customer) with government issued ID. There is no miner fees to send Bitcoin on Strike App due it's use of Bitcoin Lightning Network. There is a weekly limit of $2000 to purchase bitcoins. I love it because it allows me to invest my weekly Starbucks spending few hundred dollars into Crypto Defi platform for higher yields. I will provide a strike signup link below if you do not have one. You can use Strike fee free service and send it to CoinEx type exchange to buy MATIC tokens. I will provide CoinEx exchange link below if you do not have one.
Buying MATIC Without Fees from Robinhood Wallet
As of recently, you can buy Polygon (MATIC) as well as Bitcoin (BTC), Ethereum (ETH), Solana (SOL), , Chainlink (LINK), Compound( COMP), Shiba Inu(SHIB), Bitcoin Cash (BCH), DOGEcoin (DOGE), Litecoin (LTC), Bitcoin SV(BSV), Ethereum Classic (ETC) from Robinhood without fees directly from linked bank account and transfer out to external crypto wallet. You need to get a Robinhood crypto wallet. This is different from regular Robinhood stock investing account. I will provide a robinhood sign up link if you do not have Robinhood crypto wallet account. Great advantage of Robinhood crypto wallet is there is no fees to buy any of those cryptocurrencies. Also withdrawal fees are no existant compare to Coinbase and Binance exchanges. I hate withdrawal fees from Coinbase and Binance. It eats up to my purchases when I am little investor trying to put my weekly coffee money into a long term savings.
Calculating Uniswap APY for MATIC-CRV POOL Manually
According to info.Uniswap.org/#/polygon analytics, search for MATIC-CRV pool with 0.3%. Uniswap analytics does not tell you current APY. However, you can compute it using the daily fees. Multiply average daily fees with 365 days to get approximate yearly fees. Divide this with the current TVL to get a idea of APY. As of shooting this video MATIC-CRV pool is generating $600 in fees per day. That is 600x365=$219000 in fees. Current TVL in this pool is $168000. 219000/168000 this is 130% APY. For this Go to Fees tab. You will current fee generated per day is $600. Look at TVL on the right it says $168000. I am planning on owning CRV and MATIC anyway with so I want to earn daily fees at approximately 130% APY. This is great way to stack up on MATIC and CRV during a crypto downturn.
Uniswap V3 Liquidity Optimization
Next, I will show you how to optimize your Uniswap V3 Liquidity ranges in order to get maximum fees. For this I use a tool from uniswapv3.flipsidecrypto.com. It does not hae MATIC-CRL LP pair. However, I used the most liquid WBTC-WETH 0.05% fee pair. In that price assumption is 1 BTC is 18.07 ETH at current prices. You select the liquidity Bounds as close to 18.07 as possible. Tighter you get higher fees you will get with Uniswap V3. You will notice your yearly APY shots up when you concentrate your liquidity. When you concentration is very small or bound is small, you can easly go out of range. Give MATIC gas fees are so low you can readjust your ranges to be in range with very small in gas fee as compare to Ethereum chain. After you pick the range, this calculator tells you how much of each token in USD terms you need to have for given amount of USD. In my case it is $1000 of intial investment. Also, with tighter ranges your impermance loss will be higher as well. You will recover the impermance loss within a month of providing liquidity given you providing liquidity for pairs that are highly correlated as I described later.
Removing MATIC-CRV Pool
Go to Your Position. I have 1 MATIC-CRV 0.3% pool. Currently 0.53 CRV per MATIC. My pool is in current range of Min price of 0.42915 and 0.63383 CRV per MATIC. I am making like $1.00 or 1.5 MATIC tokens per day as fees.
Finding Highly Correlated Crypto Pairs
You want to pick highly correlated tokens pairs as shown by cryptowat.ch/correlations. You can see BTC and ETH has the highest correlation of 86% (or 0.86). You can also you Tradingview and plot the two graphs against each pair you are considering to to see the correlation against USD and against each other as well (if tokens are supported).
In Summary
In Uniswap, pick tokens pairs with very high daily trading volumes and not very large Total Value Locked (TVL). Compute the Uniswap APY as shown earlier using the Uniswap trading history. Only pick tokens that have atleast 10% APY as well. This is video is only for Polygon. However, Uniswap V3 supports Optimism, Arbitrum, Celo as well as Ethereum. It is similar in those chain as well except with Ethereum fees are too high.
If you enjoy this Uniswap V3 on Polygon Blockchain video, please subscribe and hit the tip button (it does not cost you anything) to show some love. Happy crypto!
https://invite.strike.me/R2IGWH Buy BTC No fees & No Withdrawal Fee
https://join.robinhood.com/chandrg151 Buy BTC, ETH, BCH, LTC, DOGE No fee & No Withdrawal Fee
https://www.coinex.com/register?refer_code=bagrf Very little fee to Buy BTC many others & withdraw
