Ethereum: Using Quotient to Estimate Price Impact for UniswapV3 Pools

Ethereum: Using Quotation to Measure Price Impact on UniswapV3 Pools

= 2. Create a new contract instance using “new QuoterContract()”. This will allow you to interact with the quote contract and request price data.

• Use the “quote()” method to retrieve the current price of the asset, specifying the asset symbol (e.g. “ETH” for Ethereum).

Estimating Price Impact

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The impact of swap prices on UniswapV3 pools can be assessed using the quote contract by querying the prices of two assets that are part of the pool. Here is an example:

const quoter = new QuoterContract();
const ETH = "ETH";
const USDT = "USDT";
// Query the current price of ETH and USDT on UniswapV3
quoter.quote(ETH).then((ethPrice) => {
quoter.quote-USDT().then((usdtPrice) => {
// Calculate the price impact using the formula: ΔP / P0 = ((ΔQ  (1 + r_i  t)) / Q0)
const deltaP = (ethPrice — usdtPrice) / usdtPrice; // Assuming USDT is a reserve asset
const interestrateI = 0.05; // Assume the daily interest rate is 5%
const timeToDeltaP = 24; // 1 day
console.log(Expected price impact: ${deltaP.toFixed(4)});
});
});

In this example, we query the current price of ETH and USDT on UniswapV3 using the “quote()” method. We then calculate the price impact by dividing the difference between the two prices by the original price (USDT). Finally, we use the interest rate formula to estimate the price impact.

Best Practices

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When estimating price impact, keep in mind:

• Always use a reliable and up-to-date Quoter contract library.

• Query current prices for assets that are part of the pool you are interested in.

• Use accurate and reliable data sources for the asset symbols (“ETH” and “USDT”).

• Consider using multiple sources to validate your calculations.

Conclusion

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Using the Offer Contract on Ethereum provides a convenient way to estimate price impact on UniswapV3 pools. By following these steps and best practices, you can accurately estimate price impact in the cryptocurrency markets. Remember to always stay up-to-date and ensure that your data sources are accurate and reliable.