Pairings By Sommelier: The FAQ
What is Pairings by Sommelier? Pairings by Sommelier is a platform for liquidity providers for submitting their liquidity positions on Uniswap V3. It automates adding liquidity to token pairs to maximize yields. Sommelier is open-source software licensed under Apache2.
How do I use Pairings by Sommelier?
To get started you need an Ethereum Wallet and some ETH. After that, navigate to the app, connect your Wallet and use the search tool to select a pair that you want to provide liquidity for. You can see your liquidity range and adjust your transaction speed before adding your liquidity to the pool.
Each transaction on Sommelier costs ETH known as a “gas fee” that is paid to the miners to keep the network running.
How does Pairings recommend a Liquidity Range?
When adding liquidity to a pool in Uniswap V3, Sommelier app displays what prices your liquidity is active over. This is referred to as a liquidity range or tick range.
Sommelier uses market data from a variety of sources to recommend best yielding liquidity range for the user.
How do I add Liquidity?
After you have connected your wallet, navigate back the search tool to search for a pair that you want to provide liquidity for. You can choose the desired liquidity range, adjust slippage tolerance and transaction speed before adding your liquidity to the pool.
What is the difference between Standard, Fast and Fastest transaction speeds?
The faster the chosen transaction speed the higher the fees. Larger fees incentivize miners to include a user’s transaction in a block more quickly. Until a miner includes a users transaction, their users liquidity position will not become active in trades.
What is the difference between Bearish, Neutral and Bullish market sentiment?
Market sentiment is the tone of a market, indicated through price movement. Market sentiment is bullish when prices are rising. Market sentiment is bearish when prices are falling.
When a user selects bullish or bearish price sentiment, the recommended liquidity range is adjusted by widening the range in the direction of market prices.
What is Slippage Tolerance?
Slippage in trading occurs when the price at which the order gets executed does not match the price at the time when you confirmed the transaction. When trading on Uniswap, this is referred to as “slippage tolerance” and is expressed as a percentage.
Sommelier is calculating suggested slippage tolerance for you based on historical data on what price other users expect to get vs what they actually got due to other trades executing first.
You can adjust your slippage tolerance percentage under the settings before submitting your transaction through Sommelier app.