Introduction

Concentrated Active Liquidity Management on Uniswap v3

Uniswap v3 has revolutionized liquidity provision with the introduction of "concentrated liquidity," a paradigm shift from evenly distributing liquidity along the reserves curve. In this innovative approach, liquidity is confined to specific ranges, allowing users to allocate it based on their range preferences. Unlike traditional methods, Uniswap v3 encourages users to provide liquidity within a defined range, optimizing trading within a pool. Proficiency in liquidity provision principles and the ability to adjust position ranges become crucial for maximizing user profits.

While individual investors may lack the tools to navigate this sophisticated system, Parallax has addressed this gap with its automated pool position management through the Concentrated Active Liquidity Management (CALM) system. This groundbreaking solution ensures that users can effortlessly manage their liquidity positions, aligning with the dynamic nature of Uniswap v3's concentrated liquidity model and ultimately enhancing their profitability.

Given the intricacy and advanced nature of Uniswap v3, liquidity providers face additional tasks to unlock the enhanced yields mentioned earlier:

1. Determine Optimal Price Range: Identifying the most suitable price range is crucial for maximizing returns.

2. Periodically Adjust Price Range: Ongoing assessment and adjustments to the price range based on external conditions are necessary for optimal performance.

3. Asset Rebalancing: Performing periodic asset rebalancing within a position is essential for maintaining a balanced and efficient portfolio.

4. Incur Gas Fees: Executing the aforementioned actions often involves incurring gas fees multiple times, adding to the overall complexity and cost.

To streamline this process for users, Parallax offers a solution where they can delegate position management. By staking Uniswap v3 NFTs on Parallax, users make the utilization of Uniswap v3 pools more capital-efficient across various networks, including Ethereum, Arbitrum, and Base. Notably, users can only deposit specific Uniswap v3 LP tokens, which are part of a predefined whitelist subject to evolution. The primary criteria for adding pools to the whitelist are high trading volume and Total Value Locked (TVL) on their respective chains. This approach ensures that users can benefit from a simplified and optimized experience while maximizing their capital efficiency.

For reference, here are the liquidity pools that align with the generalized criteria on different blockchain networks:

Ethereum	Arbitrum	Base
USDC-WETH	WETH-USDC.e	WETH-USDBC
WETH-USDT	WETH-USDC	CBETH-WETH
WSTETH-WETH	WETH-USDT	WETH-BASED
USDC-USDT	WETH-ARB	BALD-WETH
WBTC-WETH	WBTC-WETH	WETH-BOOST