I’ve been using Uniswap since August 2020 but I’m a little bit lost about new features that come with V3.
I’ve read this article and some questions came to my mind:
- Why do we say that with Uniswap V2, part of the liquidity provides is never put to use.
The article states:
In Uniswap v2, liquidity is distributed evenly along an x*y=k price curve, with assets reserved for all prices between 0 and infinity. For most pools, a majority of this liquidity is never put to use.
I don’t understand it because when I put some liquidity, this liquidity is “mixed” with the whole liquidity pool. So I don’t understand why the liquidity I provided would be less used than other.
I missed something but find understand what.
- I don’t understand the Capital efficiency comparison between V2 and V3
The article describes the following example:
I understand the conclusion: with less capital, we are able to earn the same.
But I don’t understand the diagram. How is the APR calculated? Can someone get a little bit into the details of how you got the figures on this diagram?
Thank you so much for your explanation!