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.
- 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.