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Half of LPs on Uniswap v3 Are Losing Money

Almost half of liquidity providers on Uniswap v3 are losing money due to impermanent loss, a recent research found. A report provided by Topaz Blue and the Bancor Protocol shows that 49.5% of LPs receive negative returns on the platform, famous for highest fees reflected by high trading volume.

The authors studied 43% of all of Uniswap v3’s liquidity pools from May 5, to Sep. 20, 2021. For the given period, those pools have generated $199 million in fees from $108.5 billion in trading volume. And during that time frame, the pools in question suffered $260 million in impermanent losses, resulting in $60 million in net total losses.

From a total of 17 analyzed pools, only three received net positive gains – WBTC/USDC, AXS/WETH, and FTM/WETH. Impermanent loss outweighed the gains in 80% of checked pools, with MKR/ETH pool showing the worst results resulting in loss for 74% of LPs.

The report suggests average users might receive better gains from their portfolios while just holding the assets without providing liquidity.

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