Companion to UniswapV3 — Concentrated Liquidity, Ticks, and Why It’s Genius. The theory is there. This is the playground.
UniswapV3’s core idea: instead of providing liquidity across [0, ∞), you choose a range. Capital efficiency grows as the range narrows. But so does risk. The tool below makes this tradeoff tangible.
Guided experiments
1. Capital efficiency vs range width
Open the Capital efficiency tab and drag the range slider from ±100% down to ±5%.
- At ±100%: efficiency ≈ 1x (equivalent to V2 full range)
- At ±20%: efficiency ≈ 5x — your $10k behaves like $50k of V2 liquidity
- At ±5%: efficiency ≈ 22x
- At ±1%: efficiency ≈ 100x
The efficiency curve is convex — the gains accelerate as ranges narrow, but so does out-of-range risk.
2. The tick system
Set current price to 2000 and range to ±20% (1600–2400). Notice the tick numbers: approximately 73,775 to 77,875. Each tick is a 0.01% price step (1.0001^tick). Positions in the 0.3% fee tier must align to multiples of 60 — your actual ticks are rounded to the nearest multiple.
Change the price to 1 USDC (stablecoin) and range to ±0.1%. Tick numbers collapse toward 0. This is why Curve-style stablecoin pools use very tight tick spacing (1) — near-zero impermanent loss and enormous capital efficiency near the peg.
3. Token composition
Open Position details and set range to $1,800–$2,000 with current price at $2,000.
Your position is ~100% USDC (you’re at the top of your range). If ETH drops to $1,900 (inside range), the pool starts converting your USDC to ETH. At $1,800 you’re 100% ETH. This is exactly how a range order works: you’re effectively auto-selling USDC for ETH as price falls.
Now set range to $2,000–$2,200 with current price at $2,000. You’re at the bottom of your range — 100% ETH. As ETH rises through your range, it gets converted to USDC.
4. Impermanent loss exposure
Open Impermanent loss tab. The red curve is the universal V2 IL formula — it applies to V3 too, within your range.
At ±20% range: IL at boundaries is ~0.95%. The range protects you from larger moves only because your position stops being active (earns no fees, gets stuck in one token) once price leaves the range.
Narrowing the range doesn’t reduce IL at boundary — it just moves the out-of-range point closer to current price.
The core insight: V3 is a bet on range
A V3 position is implicitly a prediction: “price will trade within my range for long enough that fee income exceeds IL.” Wider range = lower IL exposure per move, lower fee efficiency. Tighter range = higher efficiency, higher rebalance cost if you’re wrong.
Most passive V3 LPs lose to simply holding, because active management (rebalancing when out of range) is expensive in gas and attention. Professional market makers who run V3 positions profitably do so with algorithms that continuously adjust ranges based on volatility.
See UniswapV3 — Concentrated Liquidity, Ticks, and Why It’s Genius for the full mathematical treatment.