Collecting LP fees: claiming earnings versus increasing a position

Follow the balances

Suppose a v3 position has earned 2 A and 5 B. Collecting those amounts moves them to the selected recipient. If no liquidity-increase action follows, the existing position’s liquidity has not grown merely because the wallet received fees.

A management vault may automate collection and reinvestment. That automation belongs to the wrapper’s strategy and fees, not to every bare v3 position.

Reinvesting requires the right amounts

An in-range position typically needs both assets in a price-dependent ratio. Collected fees need not match that ratio. A reinvestment workflow may therefore swap part of the proceeds, introducing execution cost and price exposure before adding liquidity.

An out-of-range position has different inventory requirements and earns no new trading fees while inactive. Reinvesting does not itself move the selected range.

Measure after costs

For a hypothetical collection worth 6 valuation units with a network cost of 2, the cost consumes one-third of the collected value before any reinvestment transaction. This is arithmetic, not a recommended collection schedule. Track costs in the same unit and keep fee claims separate from total position return.