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Minting a Position

Introduction​

This guide will cover how to create (or mint) a liquidity position on the Uniswap V3 protocol. It is based on the minting a position code example, found in the Uniswap code examples repository. To run this example, check out the examples's README and follow the setup instructions.

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If you need a briefer on the SDK and to learn more about how these guides connect to the examples repository, please visit our background page!

In the Uniswap V3 protocol, liquidity positions are represented using non-fungible tokens. In this guide we will use the NonfungiblePositionManager class to help us mint a liquidity position for the USDC - DAI pair. The inputs to our guide are the two tokens that we are pooling for, the amount of each token we are pooling for and the Pool fee.

The guide will cover:

  1. Giving approval to transfer our tokens
  2. Creating an instance of a Pool
  3. Calculating our Position from our input tokens
  4. Configuring and executing our minting transaction

At the end of the guide, given the inputs above, we should be able to mint a liquidity position with the press of a button and view the position on the UI of the web application.

For this guide, the following Uniswap packages are used:

The core code of this guide can be found in mintPosition()

Giving approval to transfer our tokens​

We want to use the NonfungiblePositionManager contract to create our liqudity position. In situations where a smart contract is transfering tokens on our behalf, we need to give it approval to do so. This is done by interacting with the Contract of the contract, considering ERC20 Tokens are smart contracts of their own.

Considering this, the first step to create our position is to give approval to the protocol's NonfungiblePositionManager to transfer our tokens:

const token0Approval = await getTokenTransferApproval(
  token0Address,
  amount0
)
const token1Approval = await getTokenTransferApproval(
  token1Address,
  amount1
)

The logic to achieve that is wrapped in the getTokenTransferApprovals function. In short, since both USDC and DAI are ERC20 tokens, we setup a reference to their smart contracts and call the approve function:

import { ethers, BigNumber } from 'ethers'

async function getTokenTransferApproval(address: string, amount: BigNumber) {
    const provider = new ethers.providers.JsonRpcProvider(rpcUrl)

    const tokenContract = new ethers.Contract(
        token.address,
        ERC20_ABI,
        provider
    )

    return tokenContract.approve(
        NONFUNGIBLE_POSITION_MANAGER_CONTRACT_ADDRESS,
        amount
    )
}

We can get the Contract address for the NonfungiblePositionManager from Github. For Ethereum mainnet or a local fork of mainnet, we see that the contract address is 0xC36442b4a4522E871399CD717aBDD847Ab11FE88. In our example, this is defined in the constants.ts file.

Creating an instance of a Pool​

Having approved the transfer of our tokens, we now need to get data about the pool for which we will provide liquidity, in order to instantiate a Pool class.

To start, we compute our Pool's address by using a helper function and passing in the unique identifiers of a Pool - the two tokens and the Pool fee. The fee input parameter represents the swap fee that is distributed to all in range liquidity at the time of the swap.

import { computePoolAddress, FeeAmount } from '@uniswap/v3-sdk'
import { Token } from '@uniswap/sdk-core'

const token0: Token = ...
const token1: Token = ...
const fee: FeeAmount = ...
const POOL_FACTORY_CONTRACT_ADDRESS: string = ...

const currentPoolAddress = computePoolAddress({
  factoryAddress: POOL_FACTORY_CONTRACT_ADDRESS,
  tokenA: token0,
  tokenB: token1,
  fee: poolFee,
})

Again, we can get the factory contract address from Github. For Ethereum mainnet, or a local fork of mainnet, it is 0x1F98431c8aD98523631AE4a59f267346ea31F984. In our example, it is defined in constants.ts

Then, we get the Pool's data by creating a reference to the Pool's smart contract and accessing its methods, very similar to what we did in the Quoting guide:

import IUniswapV3PoolABI from '@uniswap/v3-core/artifacts/contracts/interfaces/IUniswapV3Pool.sol/IUniswapV3Pool.json'

const poolContract = new ethers.Contract(
  currentPoolAddress,
  IUniswapV3PoolABI.abi,
  provider
)

const [liquidity, slot0] =
  await Promise.all([
    poolContract.liquidity(),
    poolContract.slot0(),
  ])

Having collected the required data, we can now create an instance of the Pool class:

import { Pool } from '@uniswap/v3-sdk'

const configuredPool = new Pool(
  token0,
  token1,
  poolFee,
  slot0.sqrtPriceX96.toString(),
  liquidity.toString(),
  slot0.tick
)

We need a Pool instance to create our Position as various parameters of liquidity positions depend on the state of the Pool where they are created. An example is the current price (named sqrtPriceX96 after the way it is encoded) to know the ratio of the two Tokens we need to send to the Pool.

Liquidity provided below the current Price will be provided in the first Token of the Pool, while liquidity provided above the current Price is made up by the second Token.

Calculating our Position from our input tokens​

Having created the instance of the Pool class, we can now use that to create an instance of a Position class, which represents the price range for a specific pool that LPs choose to provide in:

import { Position } from '@uniswap/v3-sdk'
import { BigIntish } from '@uniswap/sdk-core'

// The maximum token amounts we want to provide. BigIntish accepts number, string or JSBI
const amount0: BigIntish = ...
const amount1: BigIntish = ...

const position = Position.fromAmounts({
  pool: configuredPool,
  tickLower:
    nearestUsableTick(configuredPool.tickCurrent, configuredPool.tickSpacing) -
    configuredPool.tickSpacing * 2,
  tickUpper:
    nearestUsableTick(configuredPool.tick, configuredPool.tickSpacing) +
    configuredPool.tickSpacing * 2,
  amount0: amount0,
  amount1: amount1,
  useFullPrecision: true,
})

We use the fromAmounts static function of the Position class to create an instance of it, which uses the following parameters:

  • The tickLower and tickUpper parameters specify the price range at which to provide liquidity. This example calls nearestUsableTick to get the current useable tick and adjust the lower parameter to be below it by two tickSpacing and the upper to be above it by two tickSpacing. This guarantees that the provided liquidity is "in range", meaning it will be earning fees upon minting this position
  • amount0 and amount1 define the maximum amount of currency the liquidity position can use. In this example, we supply these from our configuration parameters.

Given those parameters, fromAmounts will attempt to calculate the maximum amount of liquidity we can supply.

Configuring and executing our minting transaction​

The Position instance is then passed as input to the NonfungiblePositionManager's addCallParameters function. The function also requires an AddLiquidityOptions object as its second parameter. This is either of type MintOptions for minting a new position or IncreaseOptions for adding liquidity to an existing position. For this example, we're using a MintOptions to create our position.

import { MintOptions, NonfungiblePositionManager } from '@uniswap/v3-sdk'
import { Percent } from '@uniswap/sdk-core'

const mintOptions: MintOptions = {
  recipient: address,
  deadline: Math.floor(Date.now() / 1000) + 60 * 20,
  slippageTolerance: new Percent(50, 10_000),
}

// get calldata for minting a position
const { calldata, value } = NonfungiblePositionManager.addCallParameters(
  position,
  mintOptions
)

The MintOptions interface requires three keys:

  • recipient defines the address of the Position owner, so in our case the address of our wallet.
  • deadline defines the latest point in time at which we want our transaction to be included in the blockchain.
  • slippageTolerance defines the maximum amount of change of the ratio of the Tokens we provide. The ratio can change if for example trades that change the price of the Pool are included before our transaction.

The addCallParameters function returns the calldata as well as the value required to execute the transaction:

const transaction = {
  data: calldata,
  to: NONFUNGIBLE_POSITION_MANAGER_CONTRACT_ADDRESS,
  value: value,
  from: address,
  maxFeePerGas: MAX_FEE_PER_GAS,
  maxPriorityFeePerGas: MAX_PRIORITY_FEE_PER_GAS,
}

We use our wallet to send the transaction. As it is a write call, we need to sign the transaction with a valid private key.

const wallet = new ethers.Wallet(privateKey, provider)

const txRes = await wallet.sendTransaction(transaction)

Write calls do not return the result of the transaction. If we want to read the result we would need to use for example trace_transaction. You can find an example of that in the Range Order guide. In this example, we don't need the result of the transaction.

The effect of the transaction is to mint a new Position NFT. We should see a new position with liquidity in our list of positions.

Next Steps​

Once you have minted a position, our next guide Adding and Removing Liquidity will demonstrate how you can add and remove liquidity from that minted position!

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