V4 Add Liquidity (concentrated)

V4 enables liquidity providers to concentrate their capital within specific price ranges, leading to increased liquidity at preferred prices.

To provide liquidity to V4, navigate to the Earn tab, select Liquidity and choose V4:

  1. Select a pair

Also, check if the pair is incentivized with market maker rewards (V4 manual) which serve as an additional, separate layer of rewards on top of the LP trading fees.

Unlike regular farms, Market Maker incentives are distributed via Merkl, which checks onchain data for incentivized pools using an offchain script.

These rewards are given out every 6 hours, depending on how many tokens you've earned and the fees your position has collected during that time. Therefore, the narrower the range, the higher the market maker's rewards.

The exact distribution formula for market maker rewards:

For more specific information about how the mechanism works, you can refer to Merkl documentation.

  1. Select a mode

The mode you choose depends on the specific utility you seek:

  • Manual mode is tailored for experienced liquidity providers, granting them control over the price ranges of the liquidity they provide

  • Auto mode employs focused liquidity management strategies, handling the intricate task of adjusting price ranges for users

In auto mode users can select a Automated Liquidity Management provider and select a strategy.

More details about the strategy can be seen on the right panel with details about the ALM and the selected strategy:

When liquidity is provided through manual mode, positions are created as LP only and can earn trading fees and market maker rewards

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