Exercise 7: Fee Tier Selection and Gas Optimization

⏰ Time Investment: 45 minutes 🎯 Goal: Optimize fee tiers and minimize gas costs for maximum profitability

📚 Required Reading Integration 📖 Primary: Lesson 7: Fee Optimization and Gas Economics 📖 Supporting: Lesson 4: Building Your First LP Position

💰 Phase 1: Fee Tier Analysis (15 minutes)

Gas Cost Comparison and Optimization

Fee Tier Selection Guide

Fee Tier Selection Exercise

Exercise 1: Choose appropriate fee tier for each pair

Pair 1: USDC/USDT

• Volatility: Very Low

• Recommended tier: _____%

• Why? _________________________________

Pair 2: ETH/USDC

• Volatility: High

• Recommended tier: _____%

• Why? _________________________________

Pair 3: wstETH/ETH

• Volatility: Low (correlated)

• Recommended tier: _____%

• Why? _________________________________

Pair 4: MEME/USDC

• Volatility: Very High

• Recommended tier: _____%

• Why? _________________________________

Volume/TVL Ratio Calculation

Exercise 2: Calculate and compare pools

Pool A: ETH/USDC 0.05%

• TVL: $10,000,000

• Daily Volume: $2,000,000

• Ratio: $2M ÷ $10M = _____

Pool B: ETH/USDC 0.3%

• TVL: $50,000,000

• Daily Volume: $1,000,000

• Ratio: $1M ÷ $50M = _____

Which pool generates more fees per dollar? Pool _____ Why? _________________________________

⛽ Phase 2: Gas Economics (20 minutes)

Gas Cost Analysis

Exercise 3: Calculate total gas costs

Scenario: $10,000 position on different networks

Ethereum L1:

• Add liquidity: $_____

• Collect fees (monthly): $_____ × 4 = $_____

• Remove liquidity: $_____

• Total monthly: $_____

Arbitrum L2:

• Add liquidity: $_____

• Collect fees (monthly): $_____ × 4 = $_____

• Remove liquidity: $_____

• Total monthly: $_____

Base L2:

• Add liquidity: $_____

• Collect fees (monthly): $_____ × 4 = $_____

• Remove liquidity: $_____

• Total monthly: $_____

Break-Even Analysis

Exercise 4: Calculate minimum viable position

Network: Ethereum L1

• Monthly gas: $_____

• Expected fee rate: _____% APY

• Minimum position: $_____ ÷ (% ÷ 12) = $

Network: Arbitrum

• Monthly gas: $_____

• Expected fee rate: _____% APY

• Minimum position: $_____ ÷ (% ÷ 12) = $

Network: Base

• Monthly gas: $_____

• Expected fee rate: _____% APY

• Minimum position: $_____ ÷ (% ÷ 12) = $

Conclusion: For your $_____ position, use network _____.

📊 Phase 3: Fee Optimization Strategy (10 minutes)

Complete Fee Analysis

Your Position: $25,000 ETH/USDC

Option A: Uniswap V3 0.05% (Arbitrum)

• TVL: $50M

• Daily Volume: $10M

• Your share: _____%

• Daily fees: $_____

• Monthly fees: $_____

• Gas: $_____

• Net: $_____

Option B: Uniswap V3 0.3% (Arbitrum)

• TVL: $20M

• Daily Volume: $5M

• Your share: _____%

• Daily fees: $_____

• Monthly fees: $_____

• Gas: $_____

• Net: $_____

Option C: Aerodrome (Base)

• TVL: $5M

• Daily Volume: $2M

• Fee: 0.05%

• Emissions: 1,000 AERO/week to pool

• Your share: _____%

• Daily fees: $_____

• Weekly emissions: _____ AERO = $_____

• Monthly total: $_____

• Gas: $_____

• Net: $_____

Best Option: Option _____ Expected Monthly Return: $_____ APY: _____%

🎯 Phase 4: Optimization Action Plan (10 minutes)

Your Optimization Strategy

Current Setup:

• Positions: _________________________________

• Networks: _________________________________

• Fee tiers: _________________________________

Optimization Opportunities:

Action Items:

• Switch to L2 (if on L1 with <$25k)

• Optimize fee tiers (match to volatility)

• Improve Volume/TVL ratios

• Reduce gas costs (batch operations)

• Compare cross-protocol opportunities

Gas Optimization Checklist

• Using L2 for positions <$25k

• Batching approvals and deposits

• Timing transactions (lower gas periods)

• Setting appropriate gas limits

• Collecting fees efficiently (not too frequent)

📚 Next Steps

• Analyze your actual positions for optimization

• Calculate gas costs for all operations

• Compare fee tiers across your positions

• Review Lesson 8 for risk management

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← Back to Lesson 7 | Next: Exercise 8 →