Migrating to Uniswap V3: AKA Things to do when Ethereum (ETH) gas fees are low!
Uniswap V3 launched a little while back which offered liquidity providers a way to concentrate their assets into a much narrower band of prices instead of covering the complete infinity range of V2. This means that you have much better capital efficiently in your liquidity provision... also know as more bang for your buck... or if you wish higher returns on your invested assets.
However, due to the stupid NFT "art" craze and then the meme-coin harvesting of noobs, the gas price on Ethereum has been pretty horrible since the V3 launch, and so I've put off migrating to V3 until the fees came down a bit. Now, it is pretty common knowledge that weekends, early in the morning or late in the evening (Europe time) are the best times to get competitive Ethereum gas fees. So, I was quite pleasantly surprised to see that gas fees were hovering between 15-30 gwei when I woke up!
So, when my wife got out of bed to make granola in the oven... I hopped quickly onto the laptop to quickly push through some migrations from Uniswap V2 to V3! Thankfully, the oldest girl was at a sleepover, and the young one was still asleep after a late night of watching movies!
As always, there is a simple migration tool from V2 to V3 on the Uniswap page If you already have V2 LP tokens, you will be able to see a migrate to V3 button. Now, the way I view double-sided Liquidity Pools is that I would be happy with EITHER token in the case of a large price swing on one or the other of them. This was a lesson that first learnt when toying around with the V1 Uniswap pools, and I found that I was holding a bunch of useless tokens on a pool that is now long since forgotten in the mists of Ethereum history!
Anyway, this is even more the case for V3 as you are setting tighter limits (slightly closer than infinity that was the V2 limits), which means when you exit those limits, you will be 100% in one or the other of the paired tokens. So, unless you are crazy gambler... be happy with either token/project! It is a good incentive to pick pairs that are both worthwhile!
Setting up is pretty simple, you specify a fee and a price range. Now, keep in mind that the fee will either join you up to an existing pool (cheap) or have you create the LP contract (expensive). So, don't be greedy! Setting the price range is a simple matter of picking the upper and lower bounds in which you want your assets to be active within. I chose a rather large range for this example, as I don't want to have to micromanage the LP provision.... that would start to get quite expensive!
Changing the bounds will also affect the amounts of the paired assets that you will need to provide. If you are migrating from V2, it is likely that you will get a refund on one or the other of the pair as you are no longer trying to cover infinity! That was a pleasant surprise, although in hindsight, I should have known that that would happen!
From there, it is a simple spend approval... which is a simple transaction signature only (no fees) and then the actual migration multi-call. With the rough Ethereum gas fee sitting at around 20 gwei, the migration cost around 50-70 USD per migration for me. Definitely worth it!
Each individual personalised liquidity provision now gets a NFT that represents the assets and parameters of the V3 provision. THIS IS A WORTHWHILE USE FOR NFTs! You can trade these NFTs as per normal, and they have worth due to the assets and LP contained within it... it isn't just a URL that might or might not expire!
A little interesting aside is the fact that you now need to manually claim the fees in V3... not so much a fan of that... although, the claim is not so expensive, sitting in at around 10-15 USD at 20 gwei gas price.
So there you go, I'm fully migrated to V3. Keen to see how this plays out and looking forward to an eventual migration to Arbitrum?
Handy Crypto Tools
Ledger Nano S/X: Keep your crypto safe and offline with the leading hardware wallet provider. Not your keys, not your crypto!
Binance: My first choice of centralised exchange, featuring a wide variety of crypto and savings products.
Kucoin: My second choice in exchanges, many tokens listed here that you can't get on Binance!
Coinbase: If you need a regulated and safe environment to trade, this is the first exchange for most newcomers!
Crypto.com: Mixed feelings, but they have the BEST looking VISA debit card in existence! Seriously, it is beautiful!
CoinList: Access to early investor and crowdsale of vetted and reserached projects.
Cointracking: Automated or manual tracking of crypto for accounting and taxation reports.
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