A smart liquidity provider never puts all their eggs in one basket. Diversifying across different Uniswap pools is crucial for risk management. Allocate portions of your capital to stablecoin pairs (low risk/return), established blue-chip pairs (medium risk/return), and perhaps some higher-volatility altcoin pairs (high risk/return). This balanced approach smooths out your overall returns and protects against a single asset’s catastrophic failure. A diversified portfolio within Uniswap Liquidity Pools guide principles is a hallmark of a prudent investor.