When you provide Uniswap v3 liquidity, a system that lets users earn trading fees by supplying crypto pairs to a decentralized exchange. Also known as concentrated liquidity provision, it lets you control exactly which price ranges your tokens are used in—unlike earlier versions that spread your capital across all prices. This sounds powerful, and it is—but it also makes your money more vulnerable if prices swing outside your chosen range.
That’s where impermanent loss, the risk of losing value when the price of your deposited tokens moves away from when you added them. Also known as liquidity provider loss, it doesn’t mean you’ve lost crypto—you’ve just lost out on potential gains compared to just holding. In Uniswap v3, this risk isn’t hidden. If you set a narrow price range and the market moves beyond it, your tokens get fully swapped out. You stop earning fees and sit in one asset, watching it drop while the other rises. Many new users don’t realize this until their position is underwater.
DeFi liquidity, the supply of tokens in decentralized exchanges that enables trading without intermediaries. Also known as liquidity pools, it’s the backbone of every DEX, including Uniswap, SushiSwap, and Curve. But not all liquidity is equal. In Uniswap v3, you’re not just a passive provider—you’re an active market maker. You choose your range, manage your capital, and monitor price action. If you pick too wide a range, you get diluted fees. Too narrow, and you get wiped out by volatility. This isn’t like staking ETH on Ethereum—it’s closer to day trading, but with crypto instead of stocks.
And it’s not just about picking ranges. AMM risk, the inherent danger in automated market makers that rely on mathematical formulas instead of order books. Also known as algorithmic trading risk, it’s why even stablecoin pairs can lose you money if one token depegs. You might think USDC/USDT is safe—but if one loses its peg, your pool gets skewed. And if you’re providing liquidity to a low-volume token? You’re basically betting on its survival. Most of the posts in this collection show how people lose money not because of hacks, but because they didn’t understand how the math behind liquidity works.
What you’ll find here isn’t theory. It’s real cases: people who lost half their capital because they didn’t adjust their ranges, others who made steady income by locking in stable pairs, and the ones who got burned by fake tokens pretending to be high-yield pools. You’ll see what works, what doesn’t, and how to tell the difference before you deposit a single dollar.
Uniswap v3 on BSC offers advanced liquidity features but suffers from low adoption and poor support. Learn who should use it - and who should stick with PancakeSwap instead.