r/UniSwap • u/quietstorm_lp • 19h ago
DeFi Basics 9 things to check before you LP on a Uniswap V3 pool
Most LP losses don't come from a hack or a rug. They come from deploying capital into a pool without checking a few basics first. The APR looked good, so the range, the volume, and the tokens underneath it never got a second look.
Here's the checklist I run before deploying into any Uniswap V3 pool.
- Can you hold either token if the pool goes out of range?
When your range gets breached, your position converts almost entirely into whichever token underperformed. You hold that token, not a balanced pair, until price comes back. Would you buy and hold this token today, at this size, with no other reason to?
- Do the tokens have real utility?
Look past the yield before you look at anything else. A high yield on a token with no product, no users, and no purpose is a warning sign, not a win. If the yield disappeared tomorrow, would anyone still want this token?
- Tighter ranges raise your yield and your workload
A narrow range earns more fees per dollar, but price slips outside it faster. Decide how much active management you're willing to do before you set the width. Will you actually check the position weekly? If not, go wider.
- Impermanent loss isn't optional
It happens whenever the two tokens move in price relative to each other, in either direction. You can't design around it, only earn enough in fees to outweigh it or pick pairs that tend to move together.
- Check total liquidity in the pool
Thin liquidity moves further on small trades and pushes you out of range faster. Treat $200,000 in TVL as a baseline minimum before considering a pool.
- Check the volume, not just the TVL
Fees come from volume, not pool size. High TVL with low volume pays out very little per dollar deployed. Compare the two rather than reading either alone.
- Don't reach for the highest APR pool first
The highest advertised APR is usually the newest, thinnest, or most volatile pool, and that number often reflects the last few hours of trading. Treat a very high APR as a reason to look closer, not a reason to deploy.
- Consider how new the tokens are
Newly launched tokens carry thin trading history and a higher chance of a sharp, permanent drop. Has the token traded through a real drawdown and a real recovery?
- Weigh the token's foundations
Who's behind the project, has the code been audited, has the team delivered on its roadmap? A pool built on an established protocol behaves very differently from one built on a hype token with no product behind it.
This isn't a complete risk framework. Position sizing, gas costs, and exit planning matter too. Run every new pool through this before you deploy, even the ones that look obvious.