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Uniswap V3 liquidity providers – earn 50% more by adding liquidity to a 0.05% pool instead of a 0.3% Uniswap v3 pool

It’s super simple – the fees/reserves ratio for 0.05% pools over the past month have consistently been about 50% higher for liquidity providers in USDC/ETH, WBTC/ETH, and DAI/ETH than the fees/reserves ratio for the 0.3% version of the same pools.

Obviously, any Uniswap user would rather pay 0.05% instead of a 0.3% fee, but a month ago these pools had very low liquidity and resulted in a major price impact for large swaps. Now they’ve grown to about 1/4 of the original 0.3% pools TVL and more and more whales are starting to use them.

As a result, the daily traded volumes for 0.05% pairs are TWICE higher than the traded volumes for 0.3% pairs and they’re still climbing. Check out the volumes & TVL on Uniswap analytics: [ETH/USDC 0.05%](https://info.uniswap.org/#/pools/0x88e6a0c2ddd26feeb64f039a2c41296fcb3f5640)

At the same time, volume & total generated fees in 0.3% pairs have been in decline for a month: [Uniswap Analytics ETH/USDC 0.3%](https://info.uniswap.org/#/pools/0x8ad599c3a0ff1de082011efddc58f1908eb6e6d8)

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Here are some stats regarding the profits you can expect in **0.05%** vs 0.3%:

||TVL|24H fees|Profit / 1MM invested|
|:-|:-|:-|:-|
|[ETH/USDC 0.3%](https://info.uniswap.org/#/pools/0x8ad599c3a0ff1de082011efddc58f1908eb6e6d8)|$272,000,000|$313,000|$1150|
|[**ETH/USDC 0.05%**](https://info.uniswap.org/#/pools/0x88e6a0c2ddd26feeb64f039a2c41296fcb3f5640)|**$69,000,000**|**$100,000**|**$1450**|
|[ETH/DAI 0.3%](https://info.uniswap.org/#/pools/0xc2e9f25be6257c210d7adf0d4cd6e3e881ba25f8)|$37,000,000|$43,000|$1162|
|[**ETH/DAI 0.05%**](https://info.uniswap.org/#/pools/0x60594a405d53811d3bc4766596efd80fd545a270)|**$12,000,000**|**$20,000**|**$1666**|
|[BTC/ETH 0.3%](https://info.uniswap.org/#/pools/0xcbcdf9626bc03e24f779434178a73a0b4bad62ed)|$173,000,000|$93,000|$537|
|[**BTC/ETH 0.05%**](https://info.uniswap.org/#/pools/0x4585fe77225b41b697c938b018e2ac67ac5a20c0)|**$16,000,000**|**$13,000**|**$812**|

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In my opinion, a major reason why this easy to take advantage of inefficiency has stayed for so long is because, as far as I know, many dashboards (APY vision & competitors) do not include the 0.05% pools in their calculations.

What do you think?

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7 Comments

  1. Profit in 0.05% pools indeed stays high, but this is just because liquidity is currently low compared to 0.3% pools. As soon as more LPs invest into 0.05% pools, profit will be diluted. It is a very interesting economical experiment going on right now on uniswap.

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