Chapter 1 Preface

For education purpose. Not financial advice.

1.1 Why read this book

This book describes high-yield liquidity provision (LP) strategies for concentrated liquidity pools in all market conditions. You will learn

  • how to screen pools,
  • how to determine price ranges,
  • how to manage risks, and
  • how to track everything and calculate ROIs.

Broadly speaking, there are two designs of concentrated liquidity: continuous curves vs. discrete bins. The former group includes Uniswap V3, Orca, Ambient, and Ramses. The latter group includes Trader Joe V2, Meteora, and Maverick.

This book focuses on Uniswap V3 (UniV3) because it’s the first concentrated liquidity decentralized exchange (DEX) and the market leader with high transaction volume and low smart contract risk. After studying the UniV3 chapters, you can deploy LP strategies on Uniswap to earn 30%+ APR over months in a bear market while preserving your capital or 1000%+ APR in the first few days of a token launch. You can also apply the same knowledge to most other curve-styled concentrated liquidity DEXs because they work the same as Uniswap.

This book does not cover Trader Joe V2, instead, it covers Maverick and Meteora, which are innovations based on Trader Joe V21. Maverick’s innovation is price-following ranges. Meteora’s innovation is dynamic fees. Maverick is on zkSync and Meteora is on Solana, both are cheap to use. At the time of the writing (May 28, 2024), Meteora is tokenless and people can farm the Meteora airdrop by LPing.

1.2 Structure of the book

1.3 About the authors

Coin Data School is a data scientist with background in math and statistics. He started building open source analytics and writing about DeFi in July 2022 after the collapse of Luna UST and Three Arrows.

Wwpk is ________________________________.

We met in Taiki’s private discord.

We wish to provide some guidance so you can avoid cutting yourself when wielding the powerful LP sword. We recommend you to pause often to practice what you learned.

Good luck!

  1. We experimented Trader Joe V2 LP on Arbitrum between August 2023 and March 2024 and had lackluster results compared to Univ3 LP. The reason was Univ3 consistently captured the lion share of transaction volume. And it cost way more gas to open and close Trader Joe V2 positions. Gas is cheaper now because of EIP-4844, but we haven’t gone back.↩︎