# \[SIPS-007\] - VOLUME-WETH-USDT-005 Uniswap v3 Cellar **URL:** \ **Category:** Governance\ **Created:** [January 19, 2022, 5:18pm UTC](https://community.sommelier.finance/t/sips-007-volume-weth-usdt-005-uniswap-v3-cellar/574 "2022-01-19T17:18:18Z")\ **Posts on this page:** 5\ **Page:** 1
**Author:** ![Volume](https://yyz2.discourse-cdn.com/flex030/user_avatar/community.sommelier.finance/volume/32/112_2.png) [@Volume](https://community.sommelier.finance/u/Volume)\ **Post date:** [January 19, 2022, 5:18pm UTC](https://community.sommelier.finance/t/sips-007-volume-weth-usdt-005-uniswap-v3-cellar/574/1 "2022-01-19T17:18:18Z")
# [SIPS-007] - VOLUME-WETH-USDT-005 Uniswap v3 Cellar **Status** : Proposed **Author(s)**: Volume **Type** : Text **Discussions-to** : [SIPS-007] - VOLUME-WETH-USDT-005 Uniswap V3 Cellar **Created** : 01/19/2022 ## Simple Summary The Volume Team would like to introduce Sommelier Cellar proposals for the Sommelier community that leverage the power and capabilities of Sommelier Cellars Uniswap v3 rebalance functionality to manage Uniswap v3 range orders submitted initially by Volume, but potentially any other active management strategy teams. This cellar will consist of liquidity management of the [0.05% fee tier WETH-USDT pool](https://info.uniswap.org/#/pools/0x11b815efb8f581194ae79006d24e0d814b7697f6). This Cellar only collects fees to cover the gas costs for active rebalancing. The Cellar utilizes a wide range position to: 1. Minimize impermanent loss 2. Minimize the number of rebalance calls The cellar’s objective is to launch the first VOLUME Cellars on Sommelier where VOLUME Data science strategies actively manage positions on Uniswap v3 pools that have high TVL but low fee revenue. Sommelier Foundation, if you are interested in the community taking this proposal and conversation to an on-chain vote, please send a signal with 10 SOMM tokens at the Sommelier Address below: `somm1m767hcal3c42czfwr0tad0pvzvqdka4n9cd6cu` We will use this to deposit the 10 SOMM required to start the voting period for this proposal. ## Abstract The Volume team proposes an initial Sommelier Cellar for Unisap v3 that leverages the Sommelier rebalancing functionality to manage range order positions on Uniswap v3. The Volume team presents its first cellar for the WETH-USDT 0.05% Uniswap v3 pool. This Cellar selects an optimally wide band to limit rebalance costs on the cellar. It also assumes that fee revenue in this pool will be low so the cellar only charges fees to cover the gas costs for actively rebalancing a few times a year. This Cellar aims to be a perpetually running pool manager with low overhead and low cost for Uniswap v3 liquidity providers. The LP token for this initial cellar will be called VOLUME-WETH-USDT-005 and each deposit will yield an LP token to Liquidity Providers. The Cellar contract itself will be owned by the Sommelier Gravity Bridge. The Volume team will retain some administrator controls to manually rebalance, pause or stop the Cellar contract in the event that the Gravity Bridge does not complete these commands in a timely manner. The Cellar also limits deposits to $10,000 per transaction to limit risks as this is a first version of this strategy. The Volume Cellar contract was Audited by Quantstamp with the final audit available here: ## Motivation The Volume team motivation for the launch of this pool is the goal to showcase the capabilities of the Sommelier blockchain to manage Uniswap v3 positions and to allow Liquidity Providers who seek to hold ETH and USDT forever without a desire to manage range positions or impermanent loss adjustments. This Cellar should allow ETH and USDT Liquidity Providers new peace of mind that their positions may be maintained indefinitely by the Sommelier blockchain. ## Why launch on the Uniswap WETH-USDT 0.05% pool? Uniswap v3 LPs make money from fees collected on swap transactions. A swap with amounts `amt0` and `amt1` at a tick value `tick` gives a liquidity provider (LP) revenue in proportion to the magnitude of liquidity provided at `tick`. Suppose that token 0 is swapped for token 1. This means the LPs provide `amt1`, making it a positive value in the swap transaction, and the fees are collected on the negative quantity, `amt0`. In this case, ```python fee_revenue = abs(pool_fee_rate * amt0 * lp_liq_at_tick / pool_liq_at_tick) ``` where `pool_liq_at_tick` is the liquidity from all of the LPs in the pool and `lp_liq_at_tick` is the liquidity of the single LP. Notice that this implies **liquidity providers are in competition with each other** as higher pool liquidity means lower transaction fees. Thus, the key things LPs should look for in a pool are **low TVL** (low competition) and **high swap volume**. The Volume data science team looked at fee collections across all of the top Uniswap v3 pools over the past few months and found that the most consistently performing pools were USDC-WETH 0.05%, WETH-USDT 0.05%, and DAI-WETH 0.05%. These pools tend to get about twice the fees per TVL as the 4th and 5th best pools and more than 10 times the **fees per value locked (FPVL)** of the 10th best (on average). ![Untitled](https://canada1.discourse-cdn.com/flex030/uploads/sommelier/original/1X/1c6719b058e5b7d64d5b8f4be4ae118abdf32b5d.png) ![Untitled (1)](https://canada1.discourse-cdn.com/flex030/uploads/sommelier/original/1X/535482ea43e4089201cb0725bc6a87bd1d97e258.png) | TVL ($) | 100 day fees ($) | Pool | FPVL (100 day) | | --- | --- | --- | --- | | 35.5M | 8.6M | WETH-USDT 0.05% | 0.242 | | 28.8M | 7.5M | DAI-WETH 0.05% | 0.260 | | 249.1M | 9.3M | USDC-WETH 0.05% | 0.037 | Note: The values used to generate the above table and plots came from [https://info.uniswap.org/](https://info.uniswap.org/) and Flipside’s [Uniswap v3 Position Collected Fees table](https://docs.flipsidecrypto.com/our-data/tables/uniswap-v3-tables/position-collected-fees) on Jan 16, 2022. ## Specification ‌Overview The specification for this Cellar consists of the following: - **The Volume Range Order Analysis** - **Range Order Processing for Rebalance transactions** - **Sommelier and the Sommelier Gravity Bridge** - **Volume Cellar Smart Contracts** - **Volume Cellar Contract Audit** ## Technical Specification - **The Volume Range Order Analysis:** - **Range Order Processing for Rebalance transactions:** - **Sommelier and the Sommelier Gravity Bridge:** - **Sommelier Cellar Contract Proposal:** - **Volume Cellar Smart Contracts:** ### Rationale The Promise of the Sommelier Blockchain comes alive with the release of the VOLUME Uniswap v3 Cellar for WETH-USDT-005 deployed to mainnet. We hope this launch will prove an example for other teams to launch their own Cellars and inspire a new ecosystem of decentralized finance features powered by the Cosmos ecosystem. ## About Volume ---
**Author:** ![AnonDegen](https://yyz2.discourse-cdn.com/flex030/user_avatar/community.sommelier.finance/anondegen/32/123_2.png) [@AnonDegen](https://community.sommelier.finance/u/AnonDegen)\ **Post date:** [January 20, 2022, 6:39pm UTC](https://community.sommelier.finance/t/sips-007-volume-weth-usdt-005-uniswap-v3-cellar/574/2 "2022-01-20T18:39:29Z")
What happened to SIPS 4, 5, and 6? ---
**Author:** ![Mariodigital](https://yyz2.discourse-cdn.com/flex030/user_avatar/community.sommelier.finance/mariodigital/32/7_2.png) [@Mariodigital](https://community.sommelier.finance/u/Mariodigital)\ **Post date:** [January 21, 2022, 5:27pm UTC](https://community.sommelier.finance/t/sips-007-volume-weth-usdt-005-uniswap-v3-cellar/574/3 "2022-01-21T17:27:31Z")
You can read about those on our blog: [Three Things You Need to Know About Sommelier Governance This Week](https://sommelier.finance/blog/three-things-you-need-to-know-about-sommelier-governance-this-week) ---
**Author:** ![vardhanam](https://yyz2.discourse-cdn.com/flex030/user_avatar/community.sommelier.finance/vardhanam/32/48_2.png) [@vardhanam](https://community.sommelier.finance/u/vardhanam)\ **Post date:** [January 23, 2022, 7:46am UTC](https://community.sommelier.finance/t/sips-007-volume-weth-usdt-005-uniswap-v3-cellar/574/4 "2022-01-23T07:46:03Z")
This all makes sense and is a llgical next step in development of Sommelier. Supporting it! ---
**Author:** ![hippaz](https://avatars.discourse-cdn.com/v4/letter/h/dbc845/32.png) [@hippaz](https://community.sommelier.finance/u/hippaz)\ **Post date:** [January 31, 2022, 11:27am UTC](https://community.sommelier.finance/t/sips-007-volume-weth-usdt-005-uniswap-v3-cellar/574/5 "2022-01-31T11:27:29Z")
hi! looks good! i support it.