Uniswap V3 Liquidity Manager

A contract that manages Uniswap V3 positions for a pool containing a GEB system coin and wraps these positions into an ERC20 on behalf of the LPs.

Use Cases

Uniswap V3 was recently launched, offering a new set of tools for liquidity providers. These tools are targeted at concentrated liquidity, a mechanism that allow LPs to deposit capital into a specific price range, thus maximizing their capital efficiency. A drawback of this mechanism is that it no longer allows fungibility along the entire price curve, making it impossible to represent all LP positions with a single token.

This contract tries to solve the fungibility problem by wrapping LP positions into a single ERC20. In this specific use case, it's intended to concentrate liquidity around a non-pegged stable asset's redemption price (aka moving peg).

Overview of the Single Tranche Manager

The contract GebUniswapV3LiquidityManager is the contract that manages positions in a single tranche. For each deposit, it fetches the current redemption price and moves all deposited liquidity into a narrow band around it (what's defined as threshold). If there are no deposits for a long period of time, it's possible to force a rebalance separately.

As an example, if the threshold is set at 50% and the current redemption price is 1 RAI = 0.0012 ETH, the contract will deposit its liquidity between ~0.006 and ~0.0018.

This contract is still under active development and needs further testing as well as security audits.

Overview of the Two Tranche Manager

The contract GebUniswapV3TwoTrancheManager is the contract that manages positions in two tranches.

Imagine the following scenario with 2 tranches:

• Tranche 1: 10% of treasury, with a threshold of 5%
• Tranche 2: 90% of treasury, with a threshold of 95%

These numbers can be optimized for each pool, according to volatility or other factors.

A shortcoming of this design is that both rebalance() and deposit() gas costs increase linearly with the second tranche.

Future Improvements

Unlike Uniswap V2, Uniswap V3 can have multiple pools for the same pair, each one with a different fee structure. Currently, the liquidity manager can only operate in a single pool, meaning it'll have to choose a single fee tier. A future implementation might allow for multiple positions in multiple pools for the same pair.

Learn More

To learn more about Reflexer, check the official documentation, our blog posts and our stats page.

Moreover, we invite you to check the Uniswap V3 repo, whitepaper and docs.

The code was inspired by Uniswap Liquidity Dao.