Encyclopedia DeFi · Entry 165
Uniswap v2 and v3: full-range versus concentrated liquidity
In this article
At a glance
Key facts
| Fact | Detail | Source |
|---|---|---|
| V2 | Liquidity follows the full-range constant-product reserve relationship. | [1] |
| V3 | Positions specify bounded price ranges and can become inactive outside them. | [2] |
| Oracle | The versions use different cumulative-price accounting methods. | [1][2] |
Choose where the position offers liquidity
A v3 provider can put capital in a narrow interval around a price. While active, that capital can support more liquidity per deposited amount than the same capital spread across a full range.
If price exits the interval, the position becomes concentrated in one asset and stops providing active liquidity there. Repositioning changes exposure and can incur costs.
More concentrated fees come with different exposure
V2 and v3 have different fee and position-accounting arrangements. V3 positions can differ by range and fee tier, so two providers in the same asset pair need not earn the same return.
Compare fees with inventory changes, gas and rebalancing costs. Gross fee earnings do not equal profit relative to simply holding the original assets.
Do not extend one version’s behavior to every pool
The cited white papers describe v2 and v3 designs. Later versions and integrations can add other mechanisms. A brand name or token pair does not identify the exact pool behavior.
Use the pool address, deployment version, fee configuration and position range when reproducing a calculation.
Direct answers
Questions people ask
Does v3 remove impermanent loss?
No. Concentrated liquidity changes where and how inventory changes occur. It does not eliminate divergence from the value of holding the original assets.
Inspect the evidence
The answer and key facts have stable claim links. These records retain the scope and qualification when reused.
Uniswap v2 pools place liquidity across the full constant-product price range. Uniswap v3 lets liquidity providers choose price ranges, concentrating capital where it can trade. That changes inventory, position management and fee opportunities; it does not guarantee higher net returns for every provider.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.
Link to this claimV2: Liquidity follows the full-range constant-product reserve relationship.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.
Link to this claimV3: Positions specify bounded price ranges and can become inactive outside them.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.
Link to this claimOracle: The versions use different cumulative-price accounting methods.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.
Link to this claimRevision history
- — First publication after primary-source research and independent automated verification.
Source register
Sources and references
Retrieval dates and locators are recorded individually.- Uniswap v2 whitepaperUniswap
Full-range constant-product inventory and cumulative-price oracle design.
Locator: Price oracle; Liquidity; Fees · Version / scope: Uniswap v2 whitepaper, March 2020 · Retrieved: 2026-10-02T17:03:45.008ZOpen source - Uniswap v3 whitepaperUniswap
Range-based positions and oracle time accumulation.
Locator: Concentrated Liquidity; Oracle · Version / scope: Uniswap v3 whitepaper, March 2021 · Retrieved: 2026-10-02T17:03:45.213ZOpen source
Research and drafting use AI assistance. A separate automated review checks claims against primary sources; no external expert or named human review is implied. Publication, substantive editing, source retrieval and verification are recorded separately. This version was independently checked by an automated reviewer on 2 October 2026.
Editorial method and correctionsDegrees of Satoshi editorial project. “Uniswap v2 and v3: full-range versus concentrated liquidity.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/uniswap-v2-vs-v3/