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Increase Liquidity

Context​

Please note that PositionManager is a command-based contract, where integrators will be encoding commands and their corresponding parameters.

Increasing liquidity assumes the position already exists and the user wants to add more tokens to the position.

Setup​

See the setup guide

Guide

Below is a step-by-step guide for increasing a position's liquidity, in solidity.

1. Import and define IPositionManager​

import {IPositionManager} from "v4-periphery/src/interfaces/IPositionManager.sol";

// inside a contract, test, or foundry script:
IPositionManager posm = IPositionManager(<address>);

2. Encode Actions​

To increase a position's liquidity, the first action must be:

  • increase operation - the addition of liquidity to an existing position.

For delta resolving operations, developers may need to choose between SETTLE_PAIR, CLOSE_CURRENCY, or CLEAR_OR_TAKE actions.

In Uniswap v4, fee revenue is automatically credited to a position on increasing liquidity

There are some cases, where the fee revenue can entirely "pay" for a liquidity increase, and remainder tokens need to be collected

If increasing the liquidity requires the transfer of both tokens:

  • settle pair - pays a pair of tokens, to increase liquidity

Otherwise:

  • close currency - automatically determines if a currency should be settled or taken.
  • OR clear or take - if the token amount to-be-collected is below a threshold, opt to forfeit the dust. Otherwise, claim the tokens
import {Actions} from "v4-periphery/src/libraries/Actions.sol";

If both tokens need to be sent:

bytes memory actions = abi.encodePacked(uint8(Actions.INCREASE_LIQUIDITY), uint8(Actions.SETTLE_PAIR));

If converting fees to liquidity, and expect excess fees to be collected

bytes memory actions = abi.encodePacked(uint8(Actions.INCREASE_LIQUIDITY), uint8(Actions.CLOSE_CURRENCY), uint8(Actions.CLOSE_CURRENCY));

If converting fees to liquidity, forfeiting dust:

bytes memory actions = abi.encodePacked(uint8(Actions.INCREASE_LIQUIDITY), uint8(Actions.CLEAR_OR_TAKE), uint8(Actions.CLEAR_OR_TAKE));

3. Encoded Parameters​

When settling pair:

bytes[] memory params = new bytes[](2);

Otherwise:

bytes[] memory params = new bytes[](3);

The INCREASE_LIQUIDITY action requires the following parameters:

ParameterTypeDescription
tokenIduint256position identifier
liquidityuint256the amount of liquidity to add
amount0Maxuint128the maximum amount of currency0 liquidity msg.sender is willing to pay
amount1Maxuint128the maximum amount of currency1 liquidity msg.sender is willing to pay
hookDatabytesarbitrary data that will be forwarded to hook functions
params[0] = abi.encode(tokenId, liquidity, amount0Max, amount1Max, hookData);

The SETTLE_PAIR action requires the following parameters:

  • currency0 - Currency, one of the tokens to be paid by msg.sender
  • currency1 - Currency, the other token to be paid by msg.sender

In the above case, the parameter encoding is:

Currency currency0 = Currency.wrap(<tokenAddress1>); // tokenAddress1 = 0 for native ETH
Currency currency1 = Currency.wrap(<tokenAddress2>);
params[1] = abi.encode(currency0, currency1);

The CLOSE_CURRENCY action requires only one currency parameter and the encoding is:

params[1] = abi.encode(currency0)
params[2] = abi.encode(currency1)

The CLEAR_OR_TAKE action requires one currency and:

  • amountMax - uint256, the maximum threshold to concede dust, otherwise taking the dust.

In this case, the parameter encoding is:

params[1] = abi.encode(currency0, amount0Max);
params[2] = abi.encode(currency1, amount1Max);

4. Submit Call​

The entrypoint for all liquidity operations is modifyLiquidities().

uint256 deadline = block.timestamp + 60;

uint256 valueToPass = currency0.isAddressZero() ? amount0Max : 0;

posm.modifyLiquidities{value: valueToPass}(
    abi.encode(actions, params),
    deadline
);
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