🧠 Advanced AMM: Concentrated Liquidity & V3
Explore Uniswap V3 range orders and capital efficiency
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0 / 5 completed🚀 Advanced AMM Concepts
Beyond the basics, AMMs have complex dynamics involving slippage, MEV (Maximal Extractable Value), arbitrage, and advanced features like concentrated liquidity. Understanding these concepts helps you trade and provide liquidity more effectively.
Critical Considerations
Transaction Ordering
Miners/validators can reorder transactions within a block, enabling MEV extraction through frontrunning and sandwich attacks.
Market Efficiency
Arbitrageurs keep AMM prices aligned with centralized exchanges, but this comes at the cost of impermanent loss for LPs.
Capital Efficiency
Newer AMM designs like concentrated liquidity improve capital efficiency but require more active management.
🔍 Interactive: Advanced Concepts Explorer
Explore key advanced concepts that affect AMM trading:
Slippage & Price Impact
Large trades move the price against you. The bigger the trade relative to pool size, the worse the execution price.
Key Detail:
Current: 1.00% of pool = ~0.01% slippage
Protection Strategies
Slippage Tolerance
Set maximum acceptable slippage (e.g., 0.5%). If price moves beyond this, transaction reverts. Protects against frontrunning.
Transaction Deadlines
Set time limit for transaction execution. If not mined within deadline, it reverts. Prevents executing at stale prices.
MEV Protection
Several solutions exist to protect against MEV:
AMM Evolution
| Version | Innovation | Trade-off |
|---|---|---|
| Uniswap v2 | Constant product formula | Capital inefficient |
| Uniswap v3 | Concentrated liquidity | Requires active management |
| Curve | Stable pools with low slippage | Only for similar-value assets |
| Balancer | Multi-asset pools with custom weights | More complex to manage |