Uniswap Yield Farming
Let’s dive in crypto yield farming with a liquidity pool on Uniswap V3.
Uniswap V3 is the third version of the Uniswap decentralized crypto exchange based on the Ethereum blockchain technology. The main difference between Uniswap V3 and previous versions is the ability to create pools with more flexible pricing logic. This allows us to improve the efficiency of using liquidity and reduce losses on the exchange of crypto.
There are several ways of getting income by adding coins to the liquidity pool on Uniswap V3, but receiving trading fees is the most attractive ones.
Every time there is an exchange between two tokens in the pool, you get a share of the commission for that transaction. The size of your share depends on how many coins you have deposited into the pool compared to the total liquidity in the pool.
How to add liquidity to the pool?
1. Top up your wallet with SimpleSwap
You need enough coins to add to the pool; we chose MATIC and USDT on the Polygon blockchain. The ratio of assets in the pool will depend on the price range you choose.
2. Go to Pools on Uniswap v3
Connect to the Polygon wallet. Press +New Position and choose MATIC and USDT on Polygon.
3. Go to Set Price Range
Choose the type of pool by commission and the price range you want to use for your pool. We chose -19% | +25%. Enter the amount of liquidity you want to add to the pool in the Deposit Amounts section. Make sure that the total amount of coins you enter matches the current exchange rate.
4. Press Enter an amount
Confirm the transaction in your wallet. After the transaction is confirmed, you have successfully added liquidity to the MATIC/USDT liquidity pool on the Polygon blockchain.
Price Range Efficiency Table by Uniswap
Liquidity pools on Uniswap allow users to provide their assets for exchange and receive a share of the fees collected from each transaction. This provides high liquidity for trading crypto, and also creates an opportunity for pool participants to earn money.
Liquidity pools are the centrepiece of Uniswap and have greatly contributed to the DeFi development.
The information in this article is not a piece of financial advice or any other advice of any kind. The reader should be aware of the risks involved in trading cryptocurrencies and make their own informed decisions. SimpleSwap is not responsible for any losses incurred due to such risks. For details, please see our Terms of Service.