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We’re excited about releasing a new feature today for Uniswap v3 Liquidity Providers: fee auto-compounding.
We think this will be useful for LPs depending on how long they plan to hold positions and what they expect their Fee APR to be going forward.
In Uniswap v3 compounding of fees does not occur automatically, as it does on its predecessor, and manual compounding of fees requires doing a few different contract interactions and calculations to:
Collect fees via the Uniswap NFT Manager contract.
Possibly check the amounts of token0 and token1 required to swap so as to maximize the amount of liquidity added to the position.
Possibly perform the required swap.
Add the tokens as liquidity to the position.
Additionally because fees do not grow at a constant rate, and the cost of compounding is a multiple of the gas price, to compound optimally requires constant monitoring of a position.
Because gas prices determine the cost of compounding, the deployment of Uniswap v3 on low gas price chains means that a much larger proportion of positions would be optimally compounded a much greater number of times that on mainnet.
To automate the above process we are releasing a simple protocol: Revert Compoundor.
Positions managed by the Compoundor contract can be auto-compounded by anyone. The autoCompound function takes any uncollected fees for a position, optionally swaps them to a determined ratio given the position range and the current pool price, and adds it as liquidity to the position.
A small fraction of the collected-and-compounded fees are paid to the protocol and to compensate the accounts call the auto-compound function for their gas costs incurred. This performance fee is set to 2% on launch and by design can only be decreased, never increased.
Additionally once a position is added to the Compoundor protocol contract, the position owner is able to conveniently execute the autoCompound function at any time, in which case there are no fees charged aside from the regular gas costs of executing the call.
We are publishing a draft of a whitepaper that explains how the protocol works and how we are estimating the expected benefits of auto-compounding for any position.
Additionally the protocol contracts have had an open bug bounty on Immunefi since June 14th.
Contribute to revert-finance/compoundor development by creating an account on GitHub.
Find bugs and vulnerabilities on Revert and get paid up to $100,000.
To give it a try just visit your positions dashboard, and for any v3 position you will see a “Compound Fees” button at the bottom, by clicking on it a panel will expand that will show you the estimated benefits of auto-compounding your position given the current fee APRs.
The total yearly improvement, and the time to break-even, will depend on each positions’ performance. Depending on each LPs strategy and expectations, auto-compounding might not be ideal. Particularly on high gas-price environments like Ethereum mainnet, auto-compounding should be attractive mostly to LPs with very high fee apr, or long expected time range on their positions.
We are also excited about launching this protocol/feature today simultaneously on Mainnet, Optimism, Arbitrum, and Polygon.
So we hope you try it out, check if it makes sense for your current or future Uniswap v3 positions, and if you have any questions or comments, drop by our discord.
We’re excited about releasing a new feature today for Uniswap v3 Liquidity Providers: fee auto-compounding.
We think this will be useful for LPs depending on how long they plan to hold positions and what they expect their Fee APR to be going forward.
In Uniswap v3 compounding of fees does not occur automatically, as it does on its predecessor, and manual compounding of fees requires doing a few different contract interactions and calculations to:
Collect fees via the Uniswap NFT Manager contract.
Possibly check the amounts of token0 and token1 required to swap so as to maximize the amount of liquidity added to the position.
Possibly perform the required swap.
Add the tokens as liquidity to the position.
Additionally because fees do not grow at a constant rate, and the cost of compounding is a multiple of the gas price, to compound optimally requires constant monitoring of a position.
Because gas prices determine the cost of compounding, the deployment of Uniswap v3 on low gas price chains means that a much larger proportion of positions would be optimally compounded a much greater number of times that on mainnet.
To automate the above process we are releasing a simple protocol: Revert Compoundor.
Positions managed by the Compoundor contract can be auto-compounded by anyone. The autoCompound function takes any uncollected fees for a position, optionally swaps them to a determined ratio given the position range and the current pool price, and adds it as liquidity to the position.
A small fraction of the collected-and-compounded fees are paid to the protocol and to compensate the accounts call the auto-compound function for their gas costs incurred. This performance fee is set to 2% on launch and by design can only be decreased, never increased.
Additionally once a position is added to the Compoundor protocol contract, the position owner is able to conveniently execute the autoCompound function at any time, in which case there are no fees charged aside from the regular gas costs of executing the call.
We are publishing a draft of a whitepaper that explains how the protocol works and how we are estimating the expected benefits of auto-compounding for any position.
Additionally the protocol contracts have had an open bug bounty on Immunefi since June 14th.
Contribute to revert-finance/compoundor development by creating an account on GitHub.
Find bugs and vulnerabilities on Revert and get paid up to $100,000.
To give it a try just visit your positions dashboard, and for any v3 position you will see a “Compound Fees” button at the bottom, by clicking on it a panel will expand that will show you the estimated benefits of auto-compounding your position given the current fee APRs.
The total yearly improvement, and the time to break-even, will depend on each positions’ performance. Depending on each LPs strategy and expectations, auto-compounding might not be ideal. Particularly on high gas-price environments like Ethereum mainnet, auto-compounding should be attractive mostly to LPs with very high fee apr, or long expected time range on their positions.
We are also excited about launching this protocol/feature today simultaneously on Mainnet, Optimism, Arbitrum, and Polygon.
So we hope you try it out, check if it makes sense for your current or future Uniswap v3 positions, and if you have any questions or comments, drop by our discord.
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