Manual mode (LP only)

1. Select a Price Range

In determining your price range, you have the option to select from four predefined settings or specify a minimum and maximum price that aligns with your investment approach. Remember, a narrower range can potentially lead to higher returns, but also carries an increased risk of impermanent loss.

It's crucial to consider the expected price fluctuations over the duration of your investment. Additionally, assess the amount of time and energy you are prepared to invest in monitoring and adjusting your position in response to market shifts, along with the associated costs of these adjustments.

If the market value of the assets in your liquidity pool moves outside your set range, your holdings will shift towards one asset over the other. This change will halt your trading fee earnings until the market value re-enters your chosen range.

Also, be aware that the price you input will automatically adjust to the closest tick increment. You don't need to use a round number; this rounding is an inherent aspect of tick mechanics.

1. Input and Adjust Amounts

Enter the desired amount in one field, and the corresponding value will automatically populate in the other. This conversion depends on your chosen price range compared to the current market price. A price range closer to one side results in a higher contribution of that specific asset.

Selecting 'Full range' allows for liquidity provision across the entire price spectrum, similar to V2. Liquidity providers can choose to position their assets either above or below the market's current spot price, based on whether they're contributing a higher or lower valued token.

1. Authorize and Add Liquidity

Before adding liquidity, authorization is required. This step is only necessary for the first-time liquidity provision with a specific token. After granting permission through your wallet, click on 'Add liquidity'. Review all details and confirm by clicking 'Add liquidity' again, which will process the transaction from your wallet.

1. Accrue and Oversee

Your assets now contribute to liquidity, earning trading fees and possibly market maker rewards, depending on the incentivization of your asset pair through Sprinkle. Manage and track your positions by selecting 'View existing positions' post liquidity provision, or go to the 'Earn' tab, choose 'Positions', and then select 'LP V3'.

1. Manage Liquidity and Collect Rewards

In the V3 position management interface, you can access your position details, accumulated fees, and incentives. Features available include:

• Market maker rewards: Collect your accrued incentives (this option becomes visible only when you have pending rewards).

• Unbind: Withdraw your liquidity.

• Add: Increase liquidity to your current position.

• Harvest: Claim your accumulated rewards.

When you claim your Market Maker incentives, all your pending rewards from every DonutSwap pool will be automatically collected for you

Note that your pending market maker rewards may appear on the positions page up to 6 hours after your deposit and it may even take longer depending on the size of your position

What does the Burn Position button signify when unwrapping V3 LP?

The Burn position functionality provides the option to fully dissolve your V3 position. Opting not to use the Burn position when concluding your engagement can be advantageous if you plan to reinvest liquidity later using identical parameters. Choosing not to burn a position means it stays vacant but ready for future liquidity contributions. Conversely, activating the Burn position returns the initially paired assets to you and permanently eliminates the position.

Scenario example: ETH/USDC pool | range 2000-2500

You initially contributed 1 ETH and 2250 USDC to the liquidity pool, with the market price of ETH being 2250 USDC. This investment started accruing fees immediately.

As days passed, ETH's value rose to 2400 USDC, still within your chosen range, allowing your liquidity to remain active and continue fee accumulation.

However, the ETH price eventually escalated to 2600 USDC, surpassing your set range. This shift rendered your liquidity inactive, halting fee generation. The trading within your range altered your position's composition: you now held more USDC and less ETH.

A week later, ETH's price dipped to 2300 USDC, reentering your range. Consequently, your liquidity was reactivated, and you resumed earning fees.

After one month, you opted to withdraw from the liquidity pool. Your final withdrawal comprised 0.91 ETH and 2555 USDC, reflecting the impact of trades and accumulated fees over the period your liquidity was active. Though the asset mix shifted, the overall value of your position increased, thanks to the fees accrued.

Single-sided liquidity provision

The V3 protocol introduces a single-sided liquidity provision feature, allowing liquidity providers to contribute just one type of asset instead of a pair. This innovation aims to enhance flexibility and minimize risks for those providing liquidity.

For a clearer understanding, consider the scenario of Vitalik with 0.01 ETH, looking to offer single-sided liquidity in V3, targeting a price bracket of $2169 to $2416 per ETH.

Presently, ETH's market value is $1856.3, not aligning with Vitalik's selected range ($2169 to $2416). Consequently, Vitalik's liquidity remains inactive and won't generate fees until ETH's value enters this predetermined bracket.

Should ETH's price escalate to fall within the $2169 to $2416 spectrum, Vitalik's 0.01 ETH will become active as single-sided liquidity in the pool, enabling Vitalik to accrue fees from ETH-related trade within this range. Conversely, if ETH's price exits this range, either by dropping or surging, Vitalik's liquidity turns inactive, halting fee accumulation.

Essential Aspects of Single-Sided Liquidity Provision in V3:

1. Single-sided liquidity provision enables providers to contribute only one type of asset, rather than both in a trading pair.

2. V3 utilizes the existing market price of the assets to ascertain the necessary quantity of the counterpart asset for forming the trading pair.

3. This method of providing liquidity potentially lowers the risk for providers, as they don't need to be concerned about the value fluctuations of both assets in the pair.

4. Providers who contribute only one asset to the liquidity pool are still eligible to receive trading fees.

Single-sided liquidity providing is useful for liquidity providers who may not have both assets on hand or want to reduce their risk exposure