Uniswap-v3 LP

Table of Contents


Market Making

Dex Strategy

Note

This is a proof-of-concept strategy that demonstrates how to dynamically maintain Uniswap-V3 positions as market prices changes. More features will be added over time based on community feedback.

📝 Summary #

This strategy creates and maintains Uniswap positions as the market price changes in order to continue providing liquidity. Currently, it does not remove or update positions.

🏦 Exchanges supported #

uniswap-v3

🛠️ Strategy configs #

ParameterTypeDefaultPrompt New?Prompt
marketstring TrueEnter the trading pair you would like to provide liquidity on [connector]
fee_tierstring TrueOn which fee tier do you want to provide liquidity on? (LOW/MEDIUM/HIGH)
buy_spreaddecimal1.00TrueHow far away from the mid price do you want to place the buy position? (Enter 1 to indicate 1%)
sell_spreaddecimal1.00TrueHow far away from the mid price do you want to place the sell position? (Enter 1 to indicate 1%)
base_token_amountdecimal TrueHow much of your base token do you want to use for the buy position?
quote_token_amountdecimal TrueHow much of your quote token do you want to use for the sell position?
min_profitabilitydecimal TrueWhat is the minimum profitability for each position is be adjusted? (Enter 1 to indicate 1%)
use_volatilityboolFalseFalseDo you want to use price volatility to adjust spreads? (Yes/No)
volatility_periodint1FalseEnter how long (in hours) do you want to use for price volatility calculation
volatility_factordecimal1.00FalseEnter the multiplier applied to price volatility

📓 Description #

Trading logic

Approximation only

The description below is a general approximation of this strategy. Please inspect the strategy code in Trading Logic above to understand exactly how it works.

Starting #

  1. The bot will look for information about the pool, and if it is a valid pool. If the pool doesn’t exist, warn the user and stop the strategy
  2. Fetch the current mid price of the pool (last_price)
  3. If use_volatility is True, the bot will calculate the price volatility used to widen spreads
  4. If the pool is valid, the bot will create two starting positions:
    • The SELL position with:
      • Amount of tokens added to the position = base_token_amount
      • upper_price = (1 + sell_spread) * last_price
      • lower_price = last_price
    • The BUY position with:
      • Amount of tokens added to the position = quote_token_amount
      • upper_price = last_price
      • lower_price = (1 - buy_spread) * last_price
image.png

The bot maintains a variable total_position_range that defines the total price range, comprised of upper_price and lower_price, where the bot is providing liquidity.

Running #

Each tick, the bot monitors the pool mid price (last_price) and compare it to the bounds of total_position_range. It will adjust the position under the following scenarios:

last_price is higher than upper_price of total_position_range

  1. Create a new SELL liquidity position, using the following values:
    • Amount of tokens of the new position = base_token_amount
    • Top price bound = (1 + sell_spread) * last_price
    • Lower price bound = last_price
  2. Update total_position_range: upper_price = (1 + sell_spread) * last_price
image.png

last_price is lower than lower_price of total_position_range

  1. Create a new BUY liquidity position, using the following values:
    • Amount of tokens of the new position = quote_token_amount
    • New position upper price = last_price
    • New position lower price = (1 - buy_spread) * last_price
  2. Update total_position_range: lower_price = (1 - buy_spread) * last_price
image.png

Important Notes #

  • Currently, the strategy does not remove existing positions. The user should do it manually through the Uniswap interace (https://app.uniswap.org/#/pool).
  • The status command shows the current profitability of each position, using the quote asset as reference
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