LibraryMarkets2021Design paperCorpus record
Uniswap v3 Core
Uniswap. Hayden Adams, Noah Zinsmeister, Moody Salem, River Keefer, Dan Robinson.
The 2021 paper that replaces the uniform reserve curve with concentrated liquidity. A provider chooses a price range. Inside the range their capital acts like a constant-product pool. Outside it, their position is entirely in one asset.
Uniswap v3 lets a liquidity provider choose a price range. Inside that range their capital does more of the trading. Outside it, they are entirely in one asset and earn nothing until the price returns.
The five-minute read
The curve is no longer uniform
v2 spreads capital from price zero to infinity. v3 lets a provider concentrate on an interval, which deepens that interval and abandons the rest.
A position is not a fungible token of the whole pool
Two providers in different ranges are not holding the same claim. The paper makes positions non-fungible, and later wrappers reintroduce fungibility by narrowing the choice.
Fees are collected per range
A provider earns only while the price is inside their interval. Concentration raises fee income when they are right and sets it to zero when they are wrong.
The oracle tightens
The paper keeps a cumulative price and describes how it can be read. It is still not the spot price at the top of the block.
Capital efficiency is the slogan and the risk
The same fees can be earned with less capital if the range is tight. The same move in price can turn the position into 100 percent of the weaker asset. The paper is explicit that the liquidity is a choice of interval.
One action, walked through
- A provider picks two prices and deposits the mix of tokens that interval requires.
- While the market price sits inside the interval, the position acts like a constant-product pool scaled up, and fees accrue.
- If the price moves through the upper tick, the position is entirely in the other token, and it stops earning until the price re-enters.
- A trader's swap walks across ticks, consuming liquidity from every position that covers the current price.
- The provider withdraws by burning the position and collecting both the remaining tokens and the fees.
The argument, unpacked
Concentration is leverage against your own forecast
A tight range earns more per dollar while the forecast holds and goes out of range faster when it does not. Comparing a v3 fee rate with a v2 fee rate without the width of the range is not a comparison.
Non-fungible positions change the pool's politics
There is no single liquidity-provider token that governance can point at and say 'the pool'. Aggregators that wrap a range are a new product on top of the paper, with their own manager.
Tick spacing is a market-structure parameter
Finer ticks let ranges be precise and make swaps touch more storage. The paper treats this as a cost. A deployment that picks a spacing is choosing between precision and gas, not accepting a default from nature.
What has to be true
- Providers can adjust ranges, or they accept sitting in one asset after a move.
- The swap router walks ticks correctly. A bug in tick crossing is a bug in the price.
- Users still set slippage. Concentrated liquidity can be deep and then suddenly gone at the edge of the range.
- Oracle readers use the cumulative price over a window, not a single observation an attacker can push.
What happened after the paper
v3 shipped on Ethereum and was copied widely. Liquidity managers that rebalance ranges became their own industry. The paper does not run those managers. The durable distinction from v2 is that liquidity is an interval with a position, not a share of a single curve.
What to check before you use the idea
- What are the bounds of this position, and what is it made of if the price leaves them?
- Is the fee tier 0.05, 0.30, 1 percent, or something a fork invented?
- Is the liquidity fungible, or is a manager wrapping it?
- Is the consumer reading a time-weighted price?
Terms
- Concentrated liquidity
- Capital placed on a finite price interval so trades inside it see more depth.
- Tick
- A discrete price boundary. Ranges start and end on ticks, and swaps cross them.
- Position
- One provider's liquidity between two ticks. It is not automatically the same asset as another provider's.
- Out of range
- A price outside the interval. The position then holds only one of the two tokens and earns no fee.
The problem the paper names
In v2, most of the capital sits far from the current price and rarely trades. v3 asks whether a provider can post liquidity only where they are willing to quote, and whether the pool can still present one curve to traders.
What the design proposes
- Ticks discretise price. A position is an interval of ticks.
- Fees are no longer automatically mixed into the reserves. They accrue to the position.
- The same pair can have several fee tiers, which are separate pools in the core design.
How the mechanism is specified
- Crossing a tick updates which positions are in range. That is why the implementation is more intricate than v2.
- Concentrated liquidity increases capital efficiency and increases the speed at which a position goes one-sided.
- The paper specifies the core accounting. Periphery contracts, routers and later hooks are not the core.
What this page does not treat as proven
- Capital efficiency is not the same as profit for a liquidity provider.
- A narrow range that is not managed becomes a one-asset position. The paper describes this; it does not staff the manager.
- We do not quote fee revenue or volume.
Why a venture studio still reads it
v3 is the specification to read before a venture invents 'ranged liquidity' under a new name. The accounting of ticks and fees is the part that is easy to get wrong and expensive to discover in production.
This is Blockchain Lab's reading of a public design paper. It is not the paper, not a copy of it, and not an offer of tokens, equity, custody or a partnership. Later network behaviour can diverge from the text. Nothing here is investment, legal or technical advice.
Research status: Design paper. Last reviewed: 1 October 2026. This is a reading of a public paper, not investment, legal or security advice.