full image - Repost: After a lot of research: Is DeFi LP provision a rigged game? (from Reddit.com, After a lot of research: Is DeFi LP provision a rigged game?)
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I've spent a good time going deep into Uniswap V3 LP strategies and reached a conclusion: the game is structurally designed for LPs to lose.The Core ProblemEvery "delta-neutral" strategy falls apart. Borrow ETH on Aave, provide LP, claim you're hedged? Nope.Your LP delta changes continuously as price moves, while your debt stays fixed. Every rebalance to fix this crystallizes a loss. This is LVR (Loss Versus Rebalancing) - mathematically proven to accumulate σ².Same problem with perpetual hedges. Static hedge + dynamic exposure = guaranteed losses.Who Actually Makes Money?JIT LPs - Add $10M+ liquidity for a single block via Flashbots, capture fees, withdraw. Exposure: ~12 seconds.Arbitrageurs - They extract value FROM LPs. They're the house.Low-volatility pair LPs - Found some whales running pairs like WBTC/cbBTC, WBTC/WETH pools. Not sure if they are hedging or not.QuestionsHas anyone found a consistently profitable LP strategy without MEV infrastructure?Any approaches beyond low-volatility pairs that actually work?Has anyone success with stepped-hedge ?TL;DR: DeFi LP seems mathematically rigged. Arbitrageurs extract LVR, JIT LPs steal fees, hedging locks in losses. Change my mind.
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