A brief discussion on Uniswap V3’s LP mining

Coinman · 2022-11-02T16:31:48.000Z

Today let’s talk about Uniswap’s LP mining. Uni's fee income is very high, which is mainly fed back to LP. Due to legal risks, Uni's token was not empowered. According to data from cryptofeesinfo, Uni’s daily fees currently reach $1.55 million, second only to the existence of the Ethereum mainnet. The mainnet recommends WBTC/ETH, but the yield will be lower, but for most investors, no matter which of these two currencies is more, it is acceptable, and it will be bullish in the long run. I have predicted that the high point of ETH/BTC should be around 0.1, and the current highest level has reached 0.08+, making it difficult to break through further. ETH/BTC trading is actually relatively friendly to investors, because the high point can basically be determined, so you can also make swings based on this ratio. Of course, I personally don't like it.

Today, let’s talk about Uniswap’s LP mining. Uni’s handling fee income is very high, and it is mainly returned to LP. Due to legal risks, Uni’s token cannot be enabled.
According to cryptofeesinfo, Uni’s daily fees currently stand at $1.55 million, second only to the Ethereum mainnet.
The recommended exchange on the mainnet is WBTC/ETH, but the rate of return will be lower. However, for most investors, it is acceptable to have more of these two currencies, and they are both bullish in the long run.
I have predicted that the high point of ETH/BTC should be around 0.1, and the current highest point is only 0.08+, which is difficult to break through. ETH/BTC trading is actually quite friendly to investors, because the high point is basically certain, so you can also make waves based on this ratio, but of course I personally don’t like it.
Let’s talk about LP mining again. The annualized rate of return for WBTC/ETH LP was about 10% before. Of course, it depends on the market. If there is no fluctuation, the rate of return will be low. Considering that it will become a one-sided asset and can no longer absorb the handling fee, it is set between 0.03-0.1, which is basically safe.
The rate of return is at this level anyway. Of course, if you set a narrower range, the handling fee may be higher. It depends on your control.
The other is the LP of ETH/USDC, the yield is higher, about 20%, of course this is dynamic, according to the range and the activity of on-chain transactions. At present, this is my main LP, the yield is still quite considerable, I have been mining for half a year, and currently I have put some funds in the range of 800-2400, 800 is the last bottom-fishing price, which is acceptable.
Of course, the ranges are still different. For example, the range of 1200-1400 may have had an annualized return of 100%+ before, but the range is too small and it may end easily.
Currently, Uni is deployed on various networks and can also provide LP on Layer 2, and the cost of interaction will not be too high. Uni should be the most stable protocol at present, with the strongest profitability. Of course, if the price drops by more than half, we may consider opening a position.
You can also continue to form LP with the commission you get, or sell it as U to ensure cash flow, it depends on your preference. As for why I chose Uni, one is that I think Dex is a relatively simple protocol and will be relatively safe, and the other is that Uni also looks more reassuring. However, I still have to say that no protocol is absolutely safe, please control the risk, and this article is not an investment advice.