Liquidity providing in Uniswap v3 (2)

Read part 1 first

Is it only for whales?

Photo by Mike Doherty on Unsplash
  1. Withdrawing your tokens from pool, collecting fees
  2. Purchasing/selling one token so that both tokens have the same value
  3. Providing liquidity again in adjusted range

It’s not (only) about gas

Every time you rebalance your position, you turn your impermanent loss into permanent.

Backtesting Uniswap

Backtest for: MKR/ETH
Skipping rebalance: 1
Rebalance for week: 2
in @1.92: 26.10 MKR + 50.00 ETH = 100.00 ETH in 1.74..2.11 range -> boost: 21.49x
Rebalance for week: 3
out: 0.00 MKR + 102.44 ETH = 102.44 ETH vs HODL: 100.00 ETH, fees: 0.00, yield: 0.00% (-6.60%/2.44%/2.44%)
in @2.28: 22.44 MKR + 51.22 ETH = 102.44 ETH in 2.07..2.51 range -> boost: 21.49x
Rebalance for week: 4
out: 17.44 MKR + 62.77 ETH = 103.40 ETH vs HODL: 102.44 ETH, fees: 0.00, yield: 0.00% (-0.12%/0.94%/0.94%)
in @2.32: 22.30 MKR + 51.70 ETH = 103.40 ETH in 2.11..2.55 range -> boost: 21.49x
[…]Rebalance for week: 47
out: 6.46 MKR + 19.45 ETH = 26.99 ETH vs HODL: 26.54 ETH, fees: 0.00, yield: 0.00% (-0.49%/1.69%/1.69%)
in @1.17: 11.54 MKR + 13.49 ETH = 26.99 ETH in 1.06..1.29 range -> boost: 21.49x
Rebalance for week: 48
out: 0.00 MKR + 27.65 ETH = 27.65 ETH vs HODL: 26.99 ETH, fees: 0.00, yield: 0.00% (-16.40%/2.44%/2.44%)
in @1.71: 8.09 MKR + 13.82 ETH = 27.65 ETH in 1.55..1.88 range -> boost: 21.49x
Rebalance for week: 49
out: 14.43 MKR + 3.37 ETH = 26.32 ETH vs HODL: 27.65 ETH, fees: 0.00, yield: 0.00% (-1.38%/-4.79%/-4.79%)
in @1.60: 8.22 MKR + 13.16 ETH = 26.32 ETH in 1.46..1.76 range -> boost: 21.49x
---
Weeks: 49
Initial capital 100 ETH, pool share: 0%
End capital: 26.32 ETH, P/L: -73.68%

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The cover photo is courtesy of StockCharts at https://stockcharts.com/h-sc/ui. The photo was taken on March 15, 2021.

Where did my million dollars go?

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reuptake

crypto & wine

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