Tutorial | how to group ARB unilateral LP in Uni V3?

ARB Token is about to start trading. How do users who get airdrop form unilateral LP? How to choose the procedure rate? BlockBeats does a simple grooming.

LP building procedure

First, go to Uniswap V3 official website, switch to Arbitrum network and link wallet, click to enterThe Liquidity page.

New positions, click on the "+", then click "select tokens", fill in the ARB Token contract address (0 x912ce59144191c1204e64559fe8253a0e49e6548)

Then select the transaction pair of ARB Token. It is recommended to select ETH or USDC with larger transaction volume. After determining the transaction pair, you can choose to modify the processing fee. Generally speaking, 1% can get more commission, but it is usually used in the trading pool with less volume or liquidity, while 0.3% can get more trading volume, the fee does not fall below 1% level.

Finally, set the ARB rate range. Many users currently set the rate between 1U and 2U. When the ARB price is within the set price range, the user earns a commission. When the price is above or below the user's set liquidity range, his LP does not earn any commission. If you want to add single currency liquidity, you need to ensure that the conversion rate is not higher than the current rate of 99.99USDC per ARB, that is, the maximum conversion rate set by the user is not higher than 99.99USDC/ARB. The bands shown in the chart above are not above the maximum conversion rate, so it is possible to add only USdcs and provide liquidity to automatically buy and sell ARB tokens in the 1U to 2U bands.

It is worth noting that in the interval of relatively concentrated liquidity (in this case, between 1U and 2U), LP will earn relatively low fees, while in the interval of relatively low liquidity (for example, 0.5U), LP will earn more fees.

About the rate

Uniswap V3 pool fees are 0.01%, 0.05%, 0.3% and 1%. The more stable the trading pair is, the minimum transaction fees will apply. The higher the volatility, the higher transaction rates will be appropriate. 0.01% is usually used for stablecoin pairs and 0.05% is used for more stable transaction pairs such as ETH/BTC. Completely separate LP pools are used for different rates.

When switching from ETH to USDC, Uniswap usually gives priority to using the pool with the lower rate, i.e. 0.05%. When the volume of trading is very high, resulting in a large slip point, it will allocate part of the liquidity trading to the 0.3% pool, so that the total Swap cost can be reduced. When there is an extreme market and volume surges, higher trading rates will yield better returns.

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