Bitquery's analysis of eight Ethereum Uniswap v3 pools found that transaction costs have a disproportionate effect on smaller liquidity positions. After gas, only 18% of closed conventional positions worth less than $1,000 outperformed simply holding the original tokens, down from 51% before gas. The median gas cost for this group was 67 cents. The findings show why liquidity providers must assess fees alongside changes in token holdings and execution costs.
The study covered October 14, 2025, through October 13, 2026. Its sample comprised eight Ethereum v3 pools selected by the number of new positions added in mid-2026. The win-rate analysis for conventional positions excluded positions opened and closed within the same block.
Gas had the biggest effect on smaller positions
Among 71,166 closed conventional positions, 49% outperformed the holding benchmark before gas, while 34% did so after transaction costs. The gap generally narrowed as position size increased: a relatively small gas bill can consume much of a smaller position's excess return, while larger positions can spread the cost across more capital.
Bitquery reported the following results by position size:
- Below $1,000: 51% before gas and 18% after gas
- $1,000 to $10,000: 45% before gas and 36% after gas
- $10,000 to $100,000: 50% before gas and 45% after gas
- $100,000 to $1 million: 55% before gas and 51% after gas
- Above $1 million: 60% before gas and 59% after gas
These percentages measure the share of positions that beat the benchmark, not returns weighted by capital. They therefore do not show which size group generated the highest aggregate profit.
For positions below $1,000, gas reduced the win rate by 33 percentage points. When a position's advantage over holding the underlying tokens is narrow, even execution costs of several dozen cents can change the result.
How the study measured outperformance
Bitquery compared the tokens returned at closure, together with fees collected, against holding the tokens initially deposited. Both portfolios were valued at the exit price before gas was deducted. As a result, a position can rise in dollar value and still underperform the original-token benchmark.
A separate aggregate comparison included fees from positions that remained open at the end of the measurement period. The sample collected $41.6 million in fees, while its inventory trailed the holding benchmark by $60.6 million. Gas costs totaled $1.4 million. Using rounded figures, the overall result was $20.4 million behind the holding benchmark. Open positions were valued at prices at the end of the study period.
The study estimated total fees across the sample pools at $59.5 million, above the $41.6 million included in the position analysis. The difference came from fees that had not been claimed by the cutoff or could not be attributed to a specific position. Because the event-based method excluded unclaimed fees, open positions were not included in the win-rate calculation. Another 207 positions involving fee claims between related positions were excluded from the position-level data. Bitquery counted gas for each transaction once and allocated it across the liquidity operations in that transaction.
v4's flash accounting can reduce intermediary transfers
Ethereum transaction fees are paid in ETH. Uniswap v4's flash accounting mechanism records amounts owed internally during an operation and transfers only the net token balances at the end. This can reduce the number of transfers required for settlement swaps or liquidity changes. When a transaction passes through several pools, or combines a swap with a liquidity deposit, internal balances can offset one another instead of moving repeatedly between pool contracts.
The actual saving depends on the transaction path and how the integration is structured. A transaction combining several operations may avoid more intermediary transfers than a single-step transaction. Lower execution costs, however, do not automatically mean that a position will outperform holding the underlying tokens.
Uniswap's concentrated-liquidity model remains in v4, carrying over the core design introduced in v3: liquidity providers choose the price range in which their capital is active. As market prices move, the quantities of the two tokens in a position change. Once the price moves outside the selected range, a position may consist entirely of one asset and stop earning swap fees until the price returns to the range. If the change in inventory exceeds the fees collected, the position can still lag the holding benchmark even after gas costs fall.
More v4 liquidity operations did not measure more capital
A separate Bitquery comparison of v3 and v4 activity covered July 15 through October 13, 2026, and was corrected on October 15. It found that daily new liquidity operations on v4 rose from about 1,288 in the first week to 4,474 in the final week, roughly 3.5 times as many. V3 remained at about 1,300 new operations per day. The corrected comparison excluded zero-size events from both versions.
During the 91-day period, v4 recorded more additions than removals on 88 days, while v3 did so on 89 days. The number of operations indicates how frequently liquidity changed, but not the dollar value deposited or withdrawn. Standard position-manager routes accounted for 77% of the increase in new v4 operations; users included bots, token issuers and other wallets.
The study identified 3,074 wallets that sent transactions on both versions. Counting addresses that called the pool contracts produced a figure of 18. These are address counts, not a measure of the number of distinct users. Because v3 and v4 record fees differently, the comparison covered liquidity-operation activity only and did not measure returns for matched positions across the two versions.
VolatilePair Hook fell outside the study period
V4 allows optional Hooks to customize pool behavior, including fees, accounting and pricing curves. Returns from Hook-based pools therefore cannot be inferred solely from the standard concentrated-liquidity model. Uniswap Labs announced on October 14 that the VolatilePair Hook had launched on Ethereum, initially with an ETH/USDC pair. Its description said the Hook recalculates the buy-side and sell-side fees on each swap based on recent price movements.
Because the launch came after Bitquery's October 13 cutoff, the VolatilePair Hook was not included in the data. For liquidity providers, v4's transfer-cost savings are only one part of the return calculation. The final result also depends on changes in the tokens held, fees actually collected and gas paid over the full life of the position.