V2 vs V3 vs V4 Pools
Understanding the differences between V2, V3, and V4 liquidity pools on AchSwap.
Overview
AchSwap supports three AMM models:
| Feature | V2 | V3 | V4 |
|---|---|---|---|
| Liquidity Type | Full Range | Concentrated | Concentrated + Hooks |
| Fee Tiers | Single (0.3%) | Multiple (0.01%-10%) | Configurable per pool |
| Position Format | LP Tokens | NFT Position | LP Tokens (ERC-20) |
| Capital Efficiency | 1x | Up to 100x | Up to 100x + hooks |
| Contract Model | Separate per pair | Separate per pair | Singleton (all pools in one) |
| Hooks | No | No | Yes |
| Complexity | Simple | Advanced | Advanced |
V2 Pools (Classic AMM)
How V2 Works
V2 uses the classic xy=k formula:
- Liquidity distributed evenly across all prices
- Any price can be traded
- Simpler to understand and manage
Advantages
- Simplicity - No need to manage price ranges
- No Range Risk - Always earning fees
- Easy Tracking - Single LP token position
Disadvantages
- Lower Returns - Capital spread thin
- Lower Capital Efficiency - Same fees on less capital
V3 Pools (Concentrated Liquidity)
How V3 Works
V3 allows concentrating liquidity:
- Choose a specific price range
- Earn more fees when price is in range
- More complex but higher returns
Advantages
- Higher Returns - Concentrated fees
- Capital Efficiency - Same returns on less capital
- Custom Strategies - Multiple positions possible
Disadvantages
- Range Risk - No fees if price moves out
- Complexity - Requires active management
- More Transactions - May need to adjust range
V4 Pools (Hook-Enabled Singleton)
How V4 Works
V4 uses a singleton Pool Manager — all V4 pools exist in one contract:
- Custom hook contracts can execute logic before/after swaps
- Configurable fee tiers (not limited to 5 fixed tiers)
- Lower gas (no separate contract deployment per pool)
Advantages
- Hook Logic - Custom price calculations, dynamic fees, oracle integration
- Lower Gas - Singleton architecture
- Flexible Fees - Any fee tier at pool creation
- Composable - Hooks can interact with other protocols
Disadvantages
- Hook Risk - Custom hook logic may have unexpected behavior
- Complexity - Understanding hook permissions
- Newer - Less battle-tested than V2/V3
When to Use V2
Best For
- New liquidity providers
- Long-term passive LPing
- Token pairs with low volatility
- When you don't want to manage positions
Example
You want to LP USDC/ACHS for 6 months:
- Use V2
- Deposit and forget
- Earn 0.3% on all trades
When to Use V3
Best For
- Experienced LPing
- High-volume trading pairs
- Active position management
- Maximizing returns
Example
You're an active trader:
- Add 50x concentrated position
- Monitor price daily
- Adjust range as needed
When to Use V4
Best For
- Custom hook logic needs (dynamic fees, oracles, auto-rebalancing)
- Lower gas costs for pool creation
- Flexible fee tier requirements
- Building on top of existing hook contracts
Example
You want a pool with dynamic fees:
- Choose a V4 pool with a fee-adjustment hook
- Fees adapt to volatility automatically
- No need to manually adjust positions
Migration Between Versions
From V2 to V3
You can migrate V2 positions to V3:
- Go to Add Liquidity → V2 tab
- See your existing positions
- Click Migrate
- Set V3 parameters
- Confirm
Migration is one-click but you set your V3 parameters.
Maintaining Multiple Positions
You can have positions in all three:
- V2 for stability
- V3 for concentrated returns
- V4 for hook-enabled features
- Diversify your LP strategy
Returns Comparison
V2 Example
Deposit: $1,000 USDC + 2,500 ACHS
Annual Volume: $100,000
Your Share: 1%
Annual Fees: $300 (0.3% × $100,000)
APY: 30%
V3 Example
Same deposit, 10x concentrated:
Deposit: $1,000 USDC + 2,500 ACHS
Annual Volume: $100,000
Your Share: 1% (within range)
Concentration: 10x
Effective Annual Volume: $1,000,000
Annual Fees: $3,000
APY: 300%
Note: Actual returns depend on price staying in range
V4 Example
Same deposit, V4 with auto-rebalancing hook:
Deposit: $1,000 USDC + 2,500 ACHS
Annual Volume: $100,000
Your Share: 1% (within range)
Concentration: 10x (auto-maintained by hook)
Annual Fees: $3,000
APY: 300%
Note: Hook behavior varies — always review the hook contract
Recommendation
| User Type | Recommendation |
|---|---|
| Beginner | Start with V2 |
| Passive | V2 is fine |
| Intermediate | Try V3 with wide range |
| Advanced | V3 with active management |
| Hook builder | V4 for custom logic |
Conclusion
All three versions have their place:
- V2: Simple, stable, low maintenance
- V3: Complex, higher returns, active management
- V4: Hook-enabled, flexible fees, composable
Start with V2 to learn, then graduate to V3 or V4 as you gain experience.