V2 is ~20%; V3 has amplified IL on closer price range to spot
A more detailed explanation on LP Risk & Returns
High Fee APY
We require only 1/10 the AUM in order to provide the same level of liquidity. So given the same trade volume, our LPs earn 10x more Fee APY.
Mean-zero Impermanent Loss
LPs suffer from Mean-zero Impermanent Loss. This means that IL will oscillate around 0. Sometimes IL will be negative, making it more profitable to put asset into the pool than holding it in your wallet. In the long run, IL will converge to 0.
This is made possible with the built-in Uniswap oracle and trade delay mechanism. They will eliminate any frontrunning/cross-exchange arbitrageurs.