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.

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