UniSwap V3 introduced a new feature of concentrated liquidity pools. These pools allow liquidity providers to concentrate their liquidity in a desired range for optimal utilization of their liquidity and earn higher fees as well. But all this flexibility comes with a lot of pain! In order for liquidity providers to ensure that their positions remain within the trading range, they have to actively manage their positions. In the event that someone forgets to maintain their liquidity positions in the trade range, their liquidity will be sitting idle and they will lose the fees they earned by providing liquidity. Due to this active management requirement, many small players will be forced to leave Uniswap, since they are unable to keep track and manage their liquidity positions.
It was Gamma Labs that recognized this issue and developed a protocol that offers active liquidity management without having to worry about babysitting their positions. Gamma uses hypervisors, which are upgradable contracts, to automatically track the trading range and adjust liquidity accordingly. For anyone who does not wish to actively manage their liquidity yourself on Uniswap V3, Gamma Hypervisor is a lifesaver!
Gamma Labs’ unique value proposition for Uniswap Liquidity Providers is its automated active liquidity management. Hypervisor uses the well-known statistical methods like Bollinger Bands to track the liquidity usage on Uniswap and automatically adjust the liquidity positions once every 24 hours. This automated adjustment of liquidity positions is called as Rebalancing.
During rebalancing, the Hypervisor pulls out all liquidity positions that are outside the current trading range and creates new liquidity positions that correspond to the current trading range of Uniswap V3.
Gas Spent On Rebalancing
Gamma Hypervisors automatically rebalance the Uniswap Liquidity Positions, so liquidity providers do not have to pay ETH fees. Fees are paid by Hypervisor smart contracts and tend to be much lower than what the individual liquidity providers had to pay because Hypervisor moves liquidity in bulk for all liquidity providers. Next, let’s take a look at the amount of gas fees spent by top hypervisor pools.
The following chart displays the total amount of gas spent by the top 10 hypervisor pools (by number of liquidity providers). OHM-WETH consumed the most gas, about 40K USD. Is that because of the recent drop in price of OHM tokens like a meteorite slamming into Earth? It’s very likely!
This chart shows the gas spent vs number of rebalances performed. The most number of rebalances were performed on WETH-USDC pool!