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New changes to Homora V2 Protocol

To ensure that Homora users have access to high liquidity providing yields on Uniswap V3, leveraged liquidity providing on Uniswap V3 pools are now available on Homora V2 Optimism.
Due to the changes in Uniswap V3 mechanism, some new changes and features are introduced to Homora V2 accordingly. Here are 3 key changes to Homora V2 protocol when providing liquidity on Uniswap V3 pools.

Special section

  • Recommended Farming Weeks (for each active price range)
Note: The content written in this section assumes that the users have prior knowledge of Homora V2 and leveraged liquidity-providing concept. You can check out our past resources here if you need to freshen up or are new to the concept.

Pool Name Changes

Uniswap v3 allows multiple pools for each token pair based on its associated fee tiers.
As a result, an asset pair name followed by a fee tier is used to reference any Uniswap V3 pool across all Homora’s UI. For example, users will see a list of available Uniswap V3 pools such as WETH-USDC 0.05% as shown in Farm Pools Page below.
Uniswap V3 allows users to choose which certain price range they would like to provide liquidity to. For Homora V2 with Uniswap V3 integration, there are 2 available types of pools, each with 3 set of recommended price ratios:
Types of pools
Recommended price ratio
stable-volatile pools
1.3x, 1.5x, and 2x
stable-stable pools
1.001x, 1.0005x, and 1.0002x
As a result, users will get to select their active price range when opening a leveraged liquidity providing on available Uniswap V3 pools on Homora.
See more details in the step-by-step guide to provide liquidity on Uniswap V3 pools here.
Note: The higher the price ratio, the wider the active price range. See more details about Pool Parameters and How to Calculate Active Price Range here.

One-click Reinvest Feature

In comparison to collecting only accrued fees via a HARVEST button just like in other normal pools, Homora V2 provides users with a REINVEST button as a more convenient way to collect and compound accrued fees to user’s current LP position within only one-click.
Note1: As a result of frequent reinvesting, users can achieve a higher liquidity providing APY (Est. annual yield with compounding) compared to the displayed APR (Est. annual yield without compounding) on Homora’s UI.
Note2: Reinvest button is disabled when the LP position is out of an active range and will be enabled once again when the LP position falls back into an active range.
See full details of How Homora V2 Simplifies the UX for Farming on Uniswap V3 here
Before coming up with the optimal price ratios (PPRs), we simulated Homora V2 farming strategies on the given historical data using different values of PPRs, farming durations, leverages, and borrow ratios. The results of strategies using different PPRs are compared based on the following evaluation metrics:
  • Average PnL
  • PnL Volatility
  • Debt Ratio
  • Sharpe Ratio
We conducted a backtest experiment on the profitability of positions of Uniswap V3 on Homora V2 based on our evaluation metrics: Average PnLs, PnL volatility, Debt ratios, and Sharpe ratios. We select 3 optimal values of PPRs for leverage yield farming to be 1.3, 1.5, and 2 to suit our users' farming behaviors, whether they want to open short or long-duration positions.
In short,
Narrow range (PPR = 1.3) is most suitable for short farming duration i.e. 1-2 weeks Medium range (PPR = 1.5) is most suitable for medium farming duration i.e. 2-8 weeks Wide range (PPR = 2) is most suitable for long farming duration i.e. 8-12 weeks