What are fee tiers?

A fee tier is the percentage of the liquidity provider fee that is applied to swaps in a liquidity pool.

 

Each provider adding liquidity to a pool receives a share of the fees earned by the pool. Fees are automatically distributed equally among all participating liquidity providers.

 

Fee tiers on Uniswap v4:

  • Uniswap v4 offers an unlimited number of fee tiers.
  • Earned fees are collected and stored, but do not get added back into the pool.
  • Liquidity providers can collect earned fees without removing the liquidity from the position. (See more here: How to collect fees from a liquidity pool on Uniswap v4.)
  • Once fees are collected, liquidity providers have the option of keeping the earned fees in their wallet or add them to their liquidity position.
  • Removing liquidity from a position withdraws the amount chosen and any earned fees.

 

Fee tiers on Uniswap v3:

  • Uniswap v3 offers 1%, 0.3%, 0.05%, and 0.01% fee tiers.
  • Earned fees are collected and stored, but do not get added back into the pool.
  • Liquidity providers can collect earned fees without removing the liquidity from the position. (See more here: How to collect fees from a liquidity pool on Uniswap v3.)
  • Once fees are collected, liquidity providers have the option of keeping the earned fees in their wallet or add them to their liquidity position.
  • Removing liquidity from a position withdraws the amount chosen and any earned fees.

Fee tiers on Uniswap v2:

  • Uniswap v2 only offers a 0.3% fee tier.
  • Earned fees are automatically added back into the pool increasing the value of the liquidity position.
  • Removing liquidity from a position withdraws all tokens in the pool and any earned fees.