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Fractured Liquidity on Uniswap: ETH Is Spread Across V2, V3, V4, and Now Even Zero-Fee Competition

· 10 min read
Liquidity Master
DeFi Educator and Strategist

If you provide liquidity on Uniswap today, you are no longer choosing between "good pool" and "bad pool." You are choosing between versions, fee tiers, hooks, and routing behavior that can all compete for the same order flow.

That is the real state of Uniswap in 2026: ETH and other blue-chip tokens are fragmented across v2, v3, and v4 at the same time, and the trader-facing router is optimized for best execution, not for sending volume to the pool you personally funded.

If you want the broader chain context first, start with our Ethereum page. For protocol basics, see our Uniswap guide.

Uniswap Is Explicitly a Multi-Version Market Now​

Uniswap Labs says this plainly in its support docs: "When you use the Uniswap web app, wallet, or extension, you can use Uniswap v1, v2, v3 or v4." That matters because it means old versions do not just disappear when a new one launches. They keep competing as long as traders, routers, and LPs keep using them.

That same support article describes the versions this way:

  • v2 still exists with its simple constant-product design and a single 0.3% fee tier.
  • v3 added concentrated liquidity and multiple fee tiers.
  • v4 added hooks, more customization, and more fee-tier flexibility.

This is not a theory anymore. It is the operating reality of the app.

The Router Decides Where Flow Goes​

The most important sentence for LPs may be in Uniswap's trade-routing help docs:

"Uniswap will select the most efficient trade route considering price, liquidity, and network costs."

That default route can draw from Uniswap v2, v3, and v4 pools, and when eligible it can also use UniswapX. In other words, even if you are convinced your pool is the "right" place to LP, the actual swap flow is still decided by the best-execution logic in front of the trader.

That means:

  • You do not control whether the next ETH swap hits v2, v3, or v4.
  • You do not control whether the router prefers 5 bps, 30 bps, or a custom v4 fee.
  • You do not control whether a hook-enabled pool, a classic concentrated pool, or a UniswapX path wins the trade.

As an LP, you are making a bet on where the router will want to go later.

ETH Already Shows the Fragmentation Clearly​

I checked the live Uniswap ETH page and the linked pool pages around March 25, 2026 at 11:14 PM EDT. The same asset was visibly split across multiple venues and fee tiers at once.

On the ETH page at publication time, Uniswap showed:

  • USDC/ETH v3 0.05% with about $95.5M TVL and $137.2M 1D volume
  • ETH/USDC v4 0.3% with about $31.2M TVL and $3.5M 1D volume
  • USDC/ETH v3 0.3% with about $23.5M TVL and $3.0M 1D volume
  • USDC/ETH v2 0.3% with about $19.0M TVL and $536.1K 1D volume
  • ETH/USDT v4 0.05% with about $18.0M TVL and $4.4M 1D volume

That is the core point in one snapshot: ETH liquidity is not concentrated in one canonical pool anymore.

It is distributed across:

  • different protocol versions
  • different fee tiers
  • different pool designs
  • different routing assumptions

WBTC shows the same problem. On the ETH page, WBTC/ETH v3 0.3% and WBTC/ETH v3 0.05% were both large at the same time, with very different daily volume patterns. Even before you get to v4, liquidity is already split across fee tiers.

Stablecoins Show the Next Stage: Near-Zero Fees and Custom Fee Competition​

The live USDC page on Uniswap showed the fragmentation problem even more clearly.

At publication time, the same page listed:

  • USDC/USDT v3 0.01% with about $26.7M TVL
  • USDC/USDT v4 0.001% with about $14.9M TVL
  • USDC/USDT v4 0.0008% with about $12.9M TVL

So even if you narrow the market down to "safe stablecoin flow," you are still not looking at one dominant venue. You are looking at several versions of nearly the same trade competing on fee, structure, and route quality.

And yes, the zero-fee pressure is real too. Uniswap's support docs say v4 offers an unlimited number of fee tiers, and in the live interface data behind the app I found a dynamic v4 USDC/WETH pool linked from the public pool page with a feeTier of 0. The public page for that pool is here:

On that page at publication time, Uniswap showed roughly $6.2M TVL and $5.1M 24H volume.

That does not mean every major pair is migrating to zero fee. It does mean the competitive frontier has moved. An LP is no longer only asking:

  • Should I LP ETH/USDC on v2 or v3?

Now the question is closer to:

  • Should I LP v2?
  • v3 5 bps?
  • v3 30 bps?
  • v4 5 bps?
  • v4 30 bps?
  • v4 dynamic?
  • a custom-fee hook pool?
  • a near-zero-fee venue that might win order flow on price?

V4 Made This More Flexible and More Fragmented at the Same Time​

Uniswap's own v4 material acknowledges the trade-off. In the v4/UniswapX blog post, Uniswap Labs wrote that custom pool design had already started to "fragment Uniswap's liquidity across three (soon four) different versions" and make best-price routing harder.

That was a design trade:

  • more pool expression for builders
  • more fee choices for LPs
  • more routing complexity for traders
  • more uncertainty for where volume lands

The v4 whitepaper says hooks, singleton architecture, and flash accounting are meant to reduce the cost of routing across fragmented liquidity. That is helpful for swappers. But for LPs, the deeper issue remains: cheaper routing across fragmented pools is still fragmented routing.

What This Means for LPs in Practice​

As a provider, you are effectively choosing where to stand in a marketplace whose traffic pattern you do not control.

That has a few consequences.

1. Picking a pool is now a routing bet​

In v2, the pool choice for a given major pair was often much simpler. In v3, you added fee-tier choice. In v4, you add custom fee structures, hooks, and dynamic behavior.

Your return is now partly a forecast of:

  • future depth
  • future router preference
  • future arbitrage behavior
  • future fee competition

2. Best price can work against the LP who chose the "wrong" venue​

The router is not trying to be fair to LPs across versions. It is trying to produce the best execution for swappers.

That means your pool can be perfectly reasonable, well-funded, and still lose flow because another pool:

  • is one tick tighter
  • is one fee step cheaper
  • has better depth at the current price
  • reduces hop count
  • saves gas
  • or gets packaged into a better aggregate route

3. Low fees do not automatically mean better LP outcomes​

If a zero-fee or near-zero-fee pool attracts enough flow, it may still weaken the fee opportunity in the "main" pool. But if it attracts the marginal volume while leaving higher-fee pools with less activity, LPs in the legacy pool may simply earn less.

That is the uncomfortable middle state we are in now: more choice for market design, but more dilution of LP attention and flow.

Others Have Been Making Versions of This Argument​

This is not a new concern, and it is worth crediting people who framed it earlier.

Uniswap Labs​

Uniswap Labs itself admitted the direction of travel in 2023 when it wrote that customization was starting to fragment liquidity across versions and chains, making best-price discovery harder.

Source:

Arrakis​

Arrakis described the fee-tier problem very directly when introducing Arrakis V2:

"Trading volume often migrates amongst different fee tiered pools"

That is basically the LP problem in one sentence. Their answer was a vault design that can allocate across multiple fee tiers instead of forcing the LP to make one static choice.

Source:

Uniswap governance discussion​

A governance commenter on the Uniswap forum made the economic version of the argument:

"N pools of k liquidity are going to generate less fees for LPs than 1 pool of N·k liquidity"

That is not an official Uniswap Labs statement, but it is a clean way to describe why fragmentation can matter to LPs even if routers eventually patch over some of the user experience.

Source:

My Take​

Uniswap is becoming a better trading system and a harder LP system at the same time.

For traders, this can be great:

  • more competition
  • more routing options
  • tighter spreads
  • more fee experimentation

For LPs, it is messier:

  • more places to deploy
  • more ways to be bypassed
  • more uncertainty around where volume will settle
  • less confidence that the "obvious" pool will stay obvious

That is why I think the real LP question on Uniswap is no longer just "what pair should I provide liquidity for?"

It is:

Which version, which fee tier, which pool design, and which routing future am I actually underwriting?

And if the answer is "I don't know," that may not mean you are missing something. It may just mean the market really is that fractured now.

Sources​