Uniswap Fee Tiers Explained: Which Tier Makes the Most Money?

Uniswap's fee tiers—0.01%, 0.05%, 0.30%, and 1%—are one of the most misunderstood parts of liquidity provision. Yet they determine how much you get paid, how competitive your liquidity is, and whether traders even route their swaps through your range. If you're trying to build reliable passive income, choosing the wrong tier can reduce your earnings by 50–90%, even when your strategy is correct.

This guide breaks down what each tier means, why Uniswap created multiple tiers, which tier earns the most in different market conditions, and most importantly—how to choose the right tier for your liquidity pool before you deposit capital. You'll also see real-world examples, complete with numbers, showing how different tiers behave in practice.

Along the way, you'll find opportunities to track and analyze your own LP performance using internal tools—when you're ready, you can Get started with PoolShark or Track your positions with PoolShark.

Why Fee Tiers Exist—and Why They Matter

Before Uniswap V3, LPs all earned the same fee regardless of the asset pair. But different assets behave differently:

• Stablecoins barely move.
• ETH and WBTC are volatile but correlated.
• Mid-cap altcoins can swing 5–15% in a single day.
• New or exotic tokens can move 30–100% during news, listings, or hype cycles.

A single uniform fee didn't make sense.

Fee tiers let LPs match the risk of the pair with the appropriate compensation for liquidity. Traders also care—if a fee is too high, they'll avoid that tier. If it's too low, LPs may not earn enough to offset volatility and impermanent loss.

The result?

Choosing the correct fee tier often matters more than your range itself.

The Four Uniswap Fee Tiers (Explained)

Below is a quick breakdown of the four official Uniswap V3 fee tiers:

| Fee Tier | Fee per $1,000 Swap | Best For | Typical Pairs | LP Risk Level | |----------|---------------------|----------|----------------|----------------| | 0.01% | $0.10 | Ultra-stable assets | USDC/USDT | Very Low | | 0.05% | $0.50 | Blue chips, large caps | ETH/WBTC, ETH/USDC, ETH/LINK | Low | | 0.30% | $3.00 | Mid-caps, strong narratives | ETH/INJ, ETH/RENDER, ETH/SUI | Medium | | 1.00% | $10.00 | Exotic/volatile pairs | Low caps, wrapped assets, new listings | High |

The important thing to understand:

A pool only earns fees if traders route swaps through that tier.

If the 0.05% tier gets 90% of the volume, the 0.3% tier (even though more lucrative per swap) may earn far less in total.

How Traders Choose Fee Tiers

Traders don't manually pick a fee tier; routers automatically:

1. Scan all available fee tiers
2. Compare price impact + liquidity + gas
3. Send the order to the cheapest, deepest tier that can handle it

Routers optimize for end-user cost—not LP revenue.

This creates a natural hierarchy of which tiers win volume:

• Stablecoins → 0.01%
• Blue-chip pairs → 0.05%
• Mid-caps → 0.30%
• Illiquid/exotic pairs → 1%

Exceptions do happen—but this is the general rule.

Breaking Down Each Fee Tier: When to Use Them

0.01% Fee Tier — The Stablecoin Specialist

Best for: Stablecoin pairs and highly correlated assets

Common pairs:

• USDC/USDT
• USDC/DAI
• DAI/USDT
• stETH/ETH
• WBTC/tBTC

Why it works: Stablecoins maintain extremely tight price ranges (usually within 0.1% of each other). Traders need minimal slippage and will always route through the lowest-fee pool available.

In these pairs, the 0.01% tier typically captures 80-95% of total trading volume because:

• Price differences are minimal, so fee percentage matters most
• Arbitrage bots execute high-frequency trades through the cheapest route
• Large institutional swaps optimize for lowest cost

Income characteristics:

• Very high volume concentration
• Extremely low impermanent loss risk
• Consistent but modest APRs (typically 2-8%)
• Requires significant capital to generate meaningful income

When to avoid: Non-stablecoin pairs. Traders won't pay 0.01% fees on volatile assets when they can't get tight price ranges and liquidity depth. Your capital will sit unused while volume flows to higher fee tiers.

0.05% Fee Tier — The Blue-Chip Standard

Best for: Established, high-liquidity pairs with predictable price action

Common pairs:

• ETH/USDC
• ETH/USDT
• ETH/WBTC
• ETH/LINK
• WBTC/USDC

Why it works: Blue-chip assets have massive trading volume and deep liquidity across all fee tiers. The 0.05% tier offers the sweet spot between competitive fees and adequate compensation for providing liquidity.

For major pairs like ETH/USDC:

• Daily volume often exceeds $100-500 million
• Institutional traders and aggregators route through 0.05% for size
• Retail traders use this tier for better execution on large swaps
• Competition is fierce, but volume is so massive that returns remain strong

Income characteristics:

• Highest absolute volume among all tiers for major pairs
• Moderate impermanent loss risk depending on pair correlation
• Consistent APRs ranging from 8-25% depending on market conditions
• Requires active range management for optimal returns

The data on ETH/USDC: Across most DEX aggregators, the 0.05% tier for ETH/USDC captures 60-70% of total routing volume. Even though the 0.3% and 1% tiers exist, traders overwhelmingly prefer the lower fee when liquidity depth is comparable.

When to avoid: Exotic altcoin pairs, newly launched tokens, or assets with low trading volume. These pairs don't generate enough swap activity to justify the lower fee percentage—you'll earn more in higher tiers.

0.30% Fee Tier — The Versatile Workhorse

Best for: Mid-cap tokens, moderate volatility pairs, and most non-stablecoin combinations

Common pairs:

• ETH/INJ
• ETH/RENDER
• ETH/ARB
• ETH/OP
• USDC/LINK

Why it works: This is the original Uniswap V2 fee tier, and it remains the default for most trading pairs. It offers the best balance between:

• Reasonable fees that compensate for volatility risk
• Competitive enough to capture significant volume
• Wide enough spreads to account for impermanent loss
• Compatible with DEX aggregator routing algorithms

For mid-cap altcoins paired with ETH or stablecoins, the 0.3% tier typically dominates volume because:

• These assets have higher volatility than blue-chips
• LPs need adequate compensation for impermanent loss risk
• Traders accept slightly higher fees for adequate liquidity depth
• Most DEX aggregators still default to 0.3% for non-major pairs

Income characteristics:

• Excellent balance of volume and fee percentage
• Moderate to high impermanent loss depending on correlation
• APRs frequently range from 15-50% in active markets
• Sweet spot for most serious LPs

Real example: ETH/MATIC on Polygon's Uniswap V3 deployment shows the 0.3% tier capturing approximately 75% of total volume, despite 0.05% and 1% tiers existing. Traders view 0.3% as fair for the volatility, while LPs find returns attractive enough to concentrate liquidity.

When to avoid: Stablecoin pairs (fees are too high vs 0.01-0.05%), ultra-stable correlations like stETH/ETH, or extremely high-volume blue-chip pairs where 0.05% dominates.

1.00% Fee Tier — The High-Risk, High-Reward Frontier

Best for: Exotic pairs, newly launched tokens, low-liquidity altcoins, and high-volatility assets

Common pairs:

• ETH/meme coins (PEPE, SHIB, BONK)
• ETH/micro-cap altcoins
• Emerging narrative tokens
• Any pair with thin liquidity elsewhere

Why it works: When a trading pair has minimal liquidity, traders have no choice but to accept higher fees. The 1% tier becomes profitable when:

• The asset isn't available on centralized exchanges
• No other liquidity sources exist
• Trading volume is concentrated in short bursts
• Narrative-driven speculation creates temporary demand

During peak hype cycles for specific tokens, 1% tier LPs can generate extraordinary returns. It's not uncommon to see 100-300% APRs during viral moments—but these rarely sustain.

Income characteristics:

• Extremely volatile income streams
• Very high impermanent loss risk (often 30-80%)
• Potential for outsized returns during hype cycles
• Requires active monitoring and quick exits
• Often better suited for short-term speculation than passive income

The reality check: Most 1% tier pools see sporadic volume spikes followed by long periods of inactivity. Your capital might earn nothing for days or weeks, then generate significant fees during a single 24-hour period when a token trends on Twitter.

When to avoid: Established tokens with liquidity across multiple tiers, blue-chip assets, or any pair where you want consistent passive income. The 1% tier is for active traders willing to monitor positions closely, not set-and-forget LPs.

The Data: Which Fee Tier Actually Generates the Most Income?

Looking at aggregate data across Ethereum mainnet Uniswap V3 pools reveals clear patterns:

For Stablecoin Pairs:

• 0.01% tier: 85-95% of volume
• 0.05% tier: 5-10% of volume
• 0.30% tier: <5% of volume
• 1.00% tier: Negligible

Winner: 0.01% tier by overwhelming margin

For ETH/Major Altcoin Pairs (LINK, UNI, AAVE):

• 0.05% tier: 55-70% of volume
• 0.30% tier: 25-40% of volume
• 1.00% tier: <5% of volume

Winner: 0.05% tier captures the most volume, but 0.30% often generates competitive total fees due to higher percentage

For ETH/Mid-Cap Altcoin Pairs (INJ, RENDER, ARB):

• 0.05% tier: 20-35% of volume
• 0.30% tier: 60-75% of volume
• 1.00% tier: <10% of volume

Winner: 0.30% tier dominates both volume and total fee generation

For ETH/Exotic or New Tokens:

• 0.30% tier: 30-50% of volume
• 1.00% tier: 40-60% of volume
• Lower tiers: Often have zero liquidity

Winner: Varies by token, but 1% tier can generate exceptional fees during hype cycles despite lower volume

Critical insight: The highest-earning tier isn't constant—it shifts based on asset type, market conditions, and where other LPs deploy capital. The pools with the best volume-to-TVL ratios generate the most income per dollar deployed, regardless of fee percentage.

Volume Distribution—The Most Important Factor

The highest fee tier doesn't automatically make the most money.

You earn money only if volume goes through your tier.

Below is an example distribution for ETH/INJ on a typical day:

| Fee Tier | TVL | Volume Routed | Fees Paid | |----------|------|----------------|------------| | 0.05% | $18M | 21% | $3,150 | | 0.30% | $12M | 76% | $27,360 | | 1.00% | $1.2M | 3% | $3,600 |

Even though 1% pays $10 per $1,000 swap, it barely gets any volume.

0.30% dominates—because traders consider cost + slippage + liquidity depth.

This is why you always check historic fee distribution before deploying capital.

The Decision Framework: Choosing Your Optimal Fee Tier

Stop guessing which fee tier to use. Follow this systematic approach:

Step 1: Classify Your Trading Pair

Stablecoin pair? → Start with 0.01%

Blue-chip pair? (ETH/WBTC, ETH/USDC, major L1s) → Start with 0.05%

Mid-cap altcoin? (Top 50-200) → Start with 0.30%

Exotic/new token? → Consider 0.30% or 1.00%

Step 2: Check Volume Distribution

Before committing capital, review where actual trading volume concentrates:

1. Visit Uniswap Analytics or GeckoTerminal
2. Search for your specific trading pair
3. Compare 24h volume across all fee tiers
4. Note which tier has the highest volume

If 70%+ of volume flows through one tier, that's your answer. Deploying to a different tier means missing the majority of swap activity.

Step 3: Calculate Volume-to-TVL Ratios

The most profitable pools have high volume relative to TVL (total value locked). Calculate this for each fee tier:

Volume-to-TVL Ratio = 24h Volume ÷ TVL

Example comparison for ETH/INJ:

• 0.05% tier: $2M volume / $8M TVL = 0.25 ratio
• 0.30% tier: $8M volume / $12M TVL = 0.67 ratio ✓
• 1.00% tier: $500K volume / $1M TVL = 0.50 ratio

In this example, the 0.30% tier offers the best combination of volume capture and LP efficiency, even though the 1% tier has a decent ratio.

Step 4: Evaluate Competition and Liquidity Depth

Check how many other LPs are already providing liquidity in each tier:

Overcrowded pools (high TVL relative to volume) mean:

• More LPs splitting the same fee pie
• Lower returns per dollar you contribute
• Potentially better execution for traders (which attracts more volume)

Undercapitalized pools (low TVL relative to potential volume) mean:

• Fewer LPs splitting fees (higher returns for you)
• Higher slippage for traders (which may repel volume)
• Opportunity to capture disproportionate fees if volume increases

The sweet spot: pools with enough liquidity for reasonable trade execution but not so much that your contribution becomes a tiny fraction of total TVL.

Step 5: Consider Your Strategy and Risk Tolerance

Passive, low-maintenance approach?

• Favor 0.01% stablecoin pairs or 0.05% blue-chip pairs
• Accept lower APRs for stability and reduced IL risk
• Set wide ranges and check monthly

Active, yield-focused approach?

• Target 0.30% mid-cap pairs with strong narratives
• Balance higher APRs against manageable IL risk
• Monitor weekly and adjust ranges as needed

Aggressive, high-risk approach?

• Hunt 1% exotic pairs during hype cycles
• Accept extreme IL in exchange for potential outsized returns
• Monitor daily and exit quickly when momentum fades

Your fee tier choice should align with how much time you're willing to spend managing positions.

Real-World Fee Tier Performance Examples

Let's examine actual positions to see how fee tier selection impacts returns:

Example 1: ETH/USDC (Blue-Chip Pair)

0.05% tier:

• 24h volume: $180M
• TVL: $85M
• Daily fees generated: $90,000
• Estimated APR: 38%

0.30% tier:

• 24h volume: $45M
• TVL: $32M
• Daily fees generated: $135,000
• Estimated APR: 154%

Analysis: Despite lower volume, the 0.30% tier generates more absolute fees due to higher percentage. However, most aggregators route through 0.05% for better execution, so the 0.30% tier may not sustain this volume long-term. Risk-adjusted, 0.05% is the better choice for ETH/USDC.

Example 2: ETH/MATIC (Mid-Cap Pair)

0.05% tier:

• 24h volume: $4.2M
• TVL: $3.8M
• Daily fees generated: $2,100
• Estimated APR: 20%

0.30% tier:

• 24h volume: $12.6M
• TVL: $8.2M
• Daily fees generated: $37,800
• Estimated APR: 168%

Analysis: The 0.30% tier dominates both volume and returns. This is the optimal tier for ETH/MATIC, and where serious LPs should concentrate capital.

Example 3: ETH/PEPE (Volatile Meme Pair)

0.30% tier:

• 24h volume: $2.8M
• TVL: $4.1M
• Daily fees generated: $8,400
• Estimated APR: 75%

1.00% tier:

• 24h volume: $6.2M
• TVL: $2.3M
• Daily fees generated: $62,000
• Estimated APR: 985%

Analysis: During peak hype, the 1% tier generates extraordinary returns. However, this rarely sustains—volume can drop 90% within days, and impermanent loss can be severe. Only suitable for active traders with tight risk management.

These examples demonstrate why checking actual volume distribution is critical. The theoretically "correct" tier based on asset class doesn't always match reality.

Case Study: ETH/INJ — Which Fee Tier Wins?

Let's examine ETH/INJ, a mid-cap L1/L2 ecosystem token often paired with ETH.

The Setup

• TVL (0.05% tier): $18M
• TVL (0.30% tier): $12M
• TVL (1% tier): $1.2M

Daily swap volume: $12.8M

Volume distribution:

• 0.05%: 21%
• 0.30%: 76%
• 1.00%: 3%

Fee Distribution

Using real Uniswap math: Fees = Volume × Fee Tier

• 0.05% → $12.8M × 0.0005 = $6,400
• 0.30% → $12.8M × 0.003 = $38,400
• 1.00% → $12.8M × 0.01 = $128,000

But these totals are split across each tier's LPs proportional to liquidity.

Adjusted per $1,000 LP capital:

| Fee Tier | Effective APR (Daily → Annualized) | |----------|------------------------------------| | 0.05% | ~6–12% APR | | 0.30% | ~25–60% APR | | 1.00% | Highly variable (0%–200%+) |

Winner

For mid-caps like INJ, 0.30% consistently earns the most net income.

Case Study: ETH/LINK — Which Tier Wins?

LINK is a large-cap asset with deep liquidity and strong correlation to ETH.

The Setup

Daily volume: $45M
TVL distribution:

• 0.05% tier: $60M
• 0.30% tier: $8M
• 1.00% tier: trivial

Volume routed:

• 0.05% tier: 92%
• 0.30% tier: 7%
• 1% tier: <1%

Winner

0.05% fee tier dominates for ETH/LINK, because traders prioritize low fees over slippage.

This is one of the rare pairs where 0.05% is virtually always the best choice.

Common Fee Tier Mistakes (And How to Avoid Them)

Mistake #1: Choosing High Fee Tiers for "Higher Returns"

The trap: Assuming 1% automatically earns more than 0.05%

The reality: A 0.05% pool with $50M daily volume generates $25,000 in daily fees. A 1% pool with $1M daily volume generates only $10,000. The 0.05% pool earns 2.5x more despite being 20x cheaper.

The fix: Always check actual volume distribution before deploying capital. Volume matters more than fee percentage.

Mistake #2: Deploying to Empty Fee Tiers

The trap: Being the first LP in a new fee tier, hoping to capture all future volume

The reality: Traders route through pools with adequate liquidity depth. An empty pool—even with optimal fee tier—won't attract volume until liquidity reaches critical mass.

The fix: Deploy to fee tiers that already have meaningful TVL and proven volume. Don't try to bootstrap empty pools unless you have significant capital and a compelling reason.

Mistake #3: Ignoring Fee Tier Migration

The trap: Setting a position in the optimal tier today and never reviewing it

The reality: Volume patterns shift as market conditions change. A tier that dominated last month might see volume drain to a different tier this month.

The fix: Review your positions regularly (weekly for active strategies, monthly for passive approaches). Track where volume is actually flowing and be willing to migrate capital to different tiers when patterns shift.

This is exactly why serious LPs use tools like PoolShark—automated monitoring alerts you when your positions are underperforming or when volume migrates to different tiers.

Mistake #4: Forgetting About Impermanent Loss

The trap: Chasing the highest APR without considering IL risk

The reality: A 0.30% tier position earning 40% APR can still lose money if impermanent loss exceeds your fee income. Higher fee tiers often correlate with higher volatility pairs.

The fix: Calculate break-even scenarios before deploying. If a pair would need to stay within a 20% range for you to profit after IL, but it historically swings 40-60%, the fee tier isn't worth it.

Mistake #5: Using the Same Tier for Every Pair

The trap: Finding one tier that works and using it everywhere

The reality: Fee tiers must match asset behavior. A tier that works for ETH/LINK won't work for ETH/PEPE.

The fix: Analyze each pair individually. Check volume distribution, calculate ratios, and choose the optimal tier for that specific pair.

Advanced Strategy: Fee Tier Diversification

Instead of putting all your capital in one fee tier, consider splitting positions across multiple tiers for the same pair.

Why this works:

Hedge against uncertainty: If volume patterns shift, you have exposure to both tiers

Capture volume in both pools: During high volatility, different traders may use different tiers

Test performance: Compare which tier generates better risk-adjusted returns over 30 days

Example allocation for ETH/LINK:

• 70% in 0.05% tier (primary volume concentration)
• 30% in 0.30% tier (higher fee percentage, decent volume)

This approach sacrifices some optimization for risk management and flexibility. After 30 days, you'll have concrete data showing which tier performed better—then you can rebalance accordingly.

How to Monitor Fee Tier Performance Over Time

The optimal fee tier today might not be optimal next month. Volume patterns shift as:

• New LPs enter specific tiers
• Market conditions change
• DEX aggregators adjust routing algorithms
• Competing pairs launch on other protocols

Manual monitoring process:

1. Check your positions weekly
2. Review 24h and 7d volume across all fee tiers
3. Calculate your actual APR vs projected APR
4. Compare volume-to-TVL ratios across tiers
5. Migrate capital if another tier shows sustained superior performance

The problem: This becomes tedious when managing multiple positions across different chains.

The solution: PoolShark automates this entire process. You get:

• Real-time tracking of P&L across all positions
• APR calculations updated automatically
• Multi-chain monitoring from one dashboard
• Instant visibility into which positions are underperforming
• Historical data to identify optimization opportunities

You can track up to 2 positions completely free, or upgrade to the Starter plan for $19/month to monitor up to 10 positions with advanced analytics.

Start your free trial here and see exactly how your fee tier choices are performing—no spreadsheets or manual calculations required.

Fee Tier Selection Cheat Sheet

Here's your quick-reference guide:

| Asset Type | Recommended Fee Tier | Expected APR Range | Risk Level | |------------|---------------------|-------------------|------------| | Stablecoins (USDC/DAI) | 0.01% | 2-8% | Very Low | | Correlated assets (stETH/ETH) | 0.01% or 0.05% | 5-12% | Low | | Blue-chip pairs (ETH/WBTC) | 0.05% | 8-25% | Low-Medium | | Major altcoins (ETH/LINK) | 0.05% or 0.30% | 15-40% | Medium | | Mid-cap altcoins (ETH/INJ) | 0.30% | 20-60% | Medium-High | | Exotic/new tokens | 0.30% or 1.00% | 30-300%+ | Very High |

Remember: Always verify volume distribution before following these defaults. Market conditions change, and actual data trumps general guidelines.

Final Thoughts: Optimization Is an Ongoing Process

Choosing the right fee tier isn't a one-time decision—it's an ongoing optimization process that separates profitable LPs from disappointed ones.

The LPs earning the most money share these characteristics:

✅ They check actual volume distribution before deploying capital
✅ They calculate volume-to-TVL ratios across tiers
✅ They monitor performance regularly and migrate when patterns shift
✅ They match fee tier selection to their risk tolerance and time commitment
✅ They use data and tracking tools instead of guessing

Amateur LPs choose fee tiers based on what "feels right" or what they heard on Twitter. Professional LPs use systematic frameworks and real-time data to maximize returns.

The difference in earnings can be dramatic. A simple fee tier optimization—moving from a 0.30% pool to a 0.05% pool with 5x the volume—can double your actual income even though the fee percentage is 6x lower.

Your next steps:

1. Review your current LP positions
2. Check which fee tiers are capturing the most volume for your pairs
3. Calculate your volume-to-TVL ratios
4. Consider migrating capital to better-performing tiers
5. Set up systematic monitoring to track performance over time

And if you're managing multiple positions across chains, stop doing it manually. Try PoolShark free for 7 days and see exactly which fee tier choices are working—and which ones are costing you money.

The right fee tier won't find itself. Time to optimize your positions.

Ready to track which fee tiers are actually making you money? Start monitoring your positions with PoolShark—free for 7 days, no credit card required.