Understanding Liquidity Supply and Demand Dynamics on Uniswap
The introduction of targeted liquidity in Uniswap V3 has given market makers greater freedom and possibility to control their positions. It has additionally made the aggressive panorama greater challenging, and as a result the decision-making manner has grow to be extensively extra complicated for choosing swimming pools to optimize returns.
This document is the 2d section of an ongoing lookup piece designed to aid Uniswap market makers in grasp these new dynamics. The intention is to supply a complete overview of the aggressive market-making panorama on Uniswap. We will additionally current a number metrics and methodologies we consider can assist market makers discover and pick the suitable method to navigate the Uniswap liquidity panorama greater effectively.
Part I - A Breakdown of Uniswap Protocol Activities
In the first phase of our report, we grant a complete overview of the protocol performance. We existing a range of metrics and methodologies we accept as true with can assist market makers higher apprehend Uniswap as properly as assist examine the preferences with the aid of Market Makers as properly as Traders.
Part II (this report) - Understanding Liquidity Supply and Demand Dynamics on Uniswap
In this part, we have a look at the quite a number exogenous and endogenous variables that impact Market Makers on Uniswap and their decision-making process. We cowl frameworks for choosing a token pair and the proper price tier for a market-making position.
Part III - Classifying Uniswap's Liquidity Providers and Their Strategies
In this section, we supply an widespread evaluation of Uniswap's liquidity providers, and classify them into bots and natural Market Makers. We then shed some mild on the unique techniques by means of every cohort group.
