The challenges

Uniswap V3 provides better liquidity and price discovery, but presents some challenges for token launches, liquidity mining, and liquidity provision.

• Providing liquidity into V3 is difficult, because LPs have to choose a range, and rebalance it to stay within range.

• LPs have substantially higher risk of impermanent losses (IL) on V3, compared to V2.

• Tokens have no liquidity if they are traded outside a range.

• Directly incentivising a V3 pool (eg using the V3 staker) means a few wallets can extract most of the incentives (eg if they provide narrow liquidity).

• Positions on V3 are not ERC-20, and therefore standardised staking contracts cannot be used for liquidity mining.