Ethereum Uniswap V3 Liquidity Provider Concentration

For most pools, three or fewer providers account for the bulk of liquidity

Summary

Uniswap V3 is a market-leading decentralized exchange (DEX), processing the majority of Ethereum’s on-chain trading volume. In this study, we survey the concentration of assets and liquidity providers (LPs) across the protocol’s pools.

• We find the protocol value focused within a small set of pools which, in turn, have a small number of principal LPs.

• Five LPs provide over two-thirds of liquidity in eight of the ten largest pools.

• A single address controls the majority of liquidity for five of the ten largest pools.

Protocol success and competitiveness thus rest on a very small number of capital allocators.

Ethereum Uniswap V3 TVL Concentration

We examine the concentration of assets (total value locked, or TVL) in the top Ethereum Uniswap V3 pools. The following chart contains these pools’ individual and joint (cumulative) shares of protocol assets. The largest three pools account for 37% of the protocol TVL. The top ten pools account for 75% of the protocol TVL:

Share of Uniswap V3 assets (TVL) in the largest pools

Protocol assets are thus highly concentrated in the top pools. The bulk of protocol assets resides in just five pools.

Ethereum Uniswap V3 LP Concentration

We now consider the concentration of liquidity contributed by individual liquidity providers (LPs) to the protocol. The following chart contains the top LPs’ average shares of liquidity for the top Uniswap V3 pools. We find that the top three LPs, on average, account for 61% of liquidity. The top ten LPs, on average, account for 79% of pool liquidity:

The top ten LPs in the largest Uniswap V3 pools, on average, control 79% of liquidity. Liquidity shares are weighted by pool TVL.

Below is a summary of top the LPs’ shares of liquidity for the largest pools:

The smaller pools have even higher LP concentration. The following chart contains the top LPs’ average shares of liquidity for the largest Uniswap V3 pools 11 through 100. We find that the top three LPs, on average, account for 61% of liquidity. The top ten LPs, on average, account for 79% of liquidity:

The top LP in the largest Uniswap V3 pools 11 through 100, on average, controls 59% of liquidity. Liquidity shares are weighted by pool TVL.

To compare liquidity concentration across multiple pools, we also surveyed the TVL of individual LP addresses across all pools:

The ten largest Uniswap V3 LPs account for over 30% of total protocol assets

The ten largest LPs contribute 34% of the protocol assets across all pools. We thus also find liquidity provider concentration in the overall protocol TVL, though it is naturally lower than the concentration within individual pools. Nevertheless, several addresses may be controlled by a single entity or related entities, aggravating the concentration.

Conclusions

• Ethereum Uniswap V3 assets concentrate in a handful of pools. Just five pools account for the bulk of protocol value (TVL).

• The liquidity supplied by individual liquidity providers (LPs) is similarly highly concentrated. Three or fewer LPs provide the bulk of liquidity for most of the top pools.

• The success and competitiveness of the Uniswap V3 protocol ultimately rest on the allocation decisions of a small number of actors.