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Strategic Liquidity Provision in Uniswap v3. (arXiv:2106.12033v2 [cs.CR] UPDATED)
cs.CR updates on arXiv.org arxiv.org
Uniswap v3 is the largest decentralized exchange for digital currencies. A
novelty of its design is that it allows a liquidity provider (LP) to allocate
liquidity to one or more closed intervals of the price of an asset instead of
the full range of possible prices. An LP earns fee rewards proportional to the
amount of its liquidity allocation when prices move in this interval. This
induces the problem of {\em strategic liquidity provision}: smaller intervals
result in higher concentration …
asset currencies decentralized design digital digital currencies exchange fee liquidity rewards strategic uniswap