Total Volume + Fees
Welcome back to another week of LP bemusement and a little bit of chaos in the wider crypto realm. We are seeing LPs making consistent fees and a steadily rising TVL. Our brand-new position explorer peels back the curtain and helps you discover where the the pros are allocating their funds. We also look into apeing into a meme token from Farcaster and the LP opportunities arising from new tokens launched from new social networks.
On the docket this week:
PoolFish's position explorer hits the scene
Why people still use Uniswap v2
$Points - LP on a farcaster native meme-coin
Ledger exploit almost gets Uniswap app
PoolFish Position Explorer
If you are an active LP, our new intuitive tool gives you deeper insights into the activities of top LPs in the game. One of the most important feature could be sorting by position age to figure out which tokens have recently captured the attention of seasoned LPs. The tools filters out negative PnL positions and shows real-time data broken down by ROI, Fee APY, age of position; of pooled assets along with the concentrated range used by the LPs.
This tool is expanding its reach to embrace more chains and DEXs in the coming days-so keep an eye out!
The suite of tools coming from PoolFish is only going to get better from now on. And you can leave your feedback here.
Uniswap v2 VS Uniswap v3
There has been lively debate going on over at twitter initiated by Dan Robinson over which Uniswap version reigns supreme? and the trade-offs as compared to one another.
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This is an important question given that v4 Uniswap is just around the corner. The tweet received a lot of attention although many answered converged on one point: simplicity.
More users pointed out the difference being the nature of the LP tokens between the two protocols. While Uniswap v3 staking applications are compatible with traditional fungible v2 LP tokens used for reward pooling and liquidity locking, they aren't specifically optimized for v3's NFT-based LP tokens.
adamscochran argues that Uniswap v2 and v3 aren't simply upgrades of each other, but rather distinct products with different goals. While v2 catered to developers seeking a web3 liquidity layer, v3 prioritizes the needs of market makers (LPs) with features like concentrated liquidity and NFT-based LP tokens. This point was emphasized again by this tweet illustrating why v2 and v3 differ in some core aspects from each other:
Uniswap v2
- Illiquid
- Token launch
- Simplicity
- Low IQ devs
- Memecoins
- Pump and dumps, token taxes
- No CEX tokens
Uniswap v3
- Top pairs
- On-chain CEX competition
- Sophisticated LPs
- A lot of infra needed
Moreover, v2 Uniswap provides a simplistic infrastructure for launching full range liquidity tokens/positions. Meaning you set it and forget it, while for v3 it means having to constantly monitor and rebalancing positions.
@facesOfEth makes the case that meme-coins use a tax using v2 that discourages bots, and v3 only allows a tax upto 1% which is not enough.
Hayden Adams also re-iterated some of these points when trying to answer why v2 is still used instead of v3.
Numbers show it’s fee on transfer tokens + some tools for things like liquidity locking and staking rewards that only support v2
New goal: make v4 full range better than v2
There seems to be a demand for dynamic fees to be a part of a lot of pools so LPs are appropriately compensated for their positions even when activity is low. Uniswap V4, geared to launch in Q1 2024 would address this problem as well. V4 is also aiming to solve for the fragmentation of liquidity by introducing a singleton architecture where all the liquidity would reside and custom logic hooks would leverage this single source of liquidity.
Uniswap v4 boasts flexible hooks that adapt to user needs. It can mimic the simplicity of v2 or the complexity of standalone AMMs, including v3's intricacies.
$Points Taken - Analyzing the birth of $Points and its LPs
Recently, $Points token got a launchpad from Farcaster.xyz where @iammatthias launched a meme-token with little knowledge to how far it would go in the subsequent hours.
For us LPs, Points offers a live masterclass in meme-coin evolution: from small community to Twitter spark to viral sensation and explosive volume growth. In a matter of hours this small cap alt-coin snowballed into a ~$3 million market cap coin. This was of-course fueled by a small but strong community supporting the liquidity and spreading the word.
However as is the fate with all meme-coins, this is after it reached a high of $15 million. Meaning there are a lot of whales looking to dump their coins as well.
$Points has been launched at this address: 0xd7c1eb0fe4a30d3b2a846c04aa6300888f087a5f
and we can see that LPs made a staggering $58,000 in the past 24 hours:
but we can see that many LPs have sky-high ROIs on their positions, with narrow positions making most of the profits here:
For identifying meme coins worth LPing into, it might be beneficial to try out social apps other than twitter, even though twitter remains the breeding ground for a larger audience.
$Points breathed its first on farcaster: so for the future it may be worth your while joining it. It was wasn't long after its discovery for more seasoned LPs to enter the arena.
This tells us that meme-coins has two sides. Apeing into one hoping to make outsized returns from the asset growing. At the same time, getting in early and providing liquidity can be a relatively low-risk way to profit from the hype.
The future of $Points in uncertain as with all meme coins, the possible price at any given time is anywhere from 0 to infinity. So tread carefully LPs.
Ledger Hack
Ledger Connect Kit is a dev tool used in an array of Dapps. Recently one of their team members got phished and had their keys stolen. The keys were used to update the ledger Connect package forcing developers to integrate them in their apps.
This resulted a period of roughly 2 hours where nearly ~$500,000 of funds were stolen from user accounts. The problem has since been fixed.
4:49pm CET:
Ledger Connect Kit genuine version 1.1.8 is being propagated now automatically. We recommend waiting 24 hours until using the Ledger Connect Kit again.
The investigation continues, here is the timeline of what we know about…
This is a jarring reminder that even established companies fall victim to exploits and in the realm of crypto, and there are new attack vectors being discovered everyday. It pays to be vigilant and keep up with the news as to identify threats early on as a user/LP. There are still ways to go before crypto becomes safe enough for the average user to trust it blindly.
Uniswap front-end almost fell victim to the attack when a malicious user tried to inject their app with this exploit. This was avoided due to the Uniswap team being extra vigilant on who contributes what to their application.
In september, we received a community PR to support ledger connect, and @jordanfrankfurt decided not to approve it because of the package distribution model
But sometimes it's spooky! You never know if contributor ==
Top Pools of the Week
High-Risk
PRIME/ETH in the exotic pairs category for the ones feeling adventurous.
Low-Risk
WBTC/ETH for the balanced swimmers.
Safe
USDC/ETH in the 5bps category for the cautious paddlers.
PS: Don't forget to check out PoolFish's new tool and leave your feedback to a reply on this email.
That is a wrap folks. Reply to this email and let us know what you're thinking about LPing on meme-coins or otherwise. Till next week!