> For the complete documentation index, see [llms.txt](https://whitepaper-old.steakhut.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://whitepaper-old.steakhut.finance/getting-started/liquidity/passive-strategies/dynamic-range-strategy.md).

# Dynamic Range Strategy

## **Description**

Liquidity ranges are automatically rebalanced when certain rebalance triggers are hit. A rebalance is automatically triggered as the active price approaches the edge of the liquidity range.

A second rebalance is then called after the active bin retreats into the liquidity range of the opposing token. This rebalance acts to bring the vault ratio back towards 50:50 and helping to reduce divergence risk.

Rebalancing is executed within range to limit the swapping of tokens which could otherwise incur swap fees.

## Balanced Dynamic Strategies

Balanced dynamic strategies utilize a relatively wide range, with an even distribution. A wider-range results in fewer rebalances and takes into account higher token pair volatility.

## Concentrated Dynamic Strategies (Coming Soon)

Concentrated dynamic strategies utilize a relatively concentrated range, with an even liquidity distribution. A concentrated strategy caters to users with a higher risk preference. A narrower liquidity range allows the strategy to capture higher swap fees but is more susceptible to divergence loss and rebalancing costs during volatile markets.   

## **Applicable Pool Types**

Stable-volatile pairs, volatile-volatile asset pairs

## **Example Pools**

AVAX-USDC, WETH.e-USDC, JOE-AVAX

## **Advantages**

* Rebalancing is executed automatically allowing for the optimization of liquidity to active price ranges.
* Accrued fees will be compounded back into the position regularly on behalf of LPs compounding yield.
* Wider ranges generally experience less divergence loss and experience lower rebalancing costs. Balanced strategies tend to outperform concentrated during volatile markets and over longer time periods.
* In a low-volatility environment, narrower ranges generally earn more in fees and tend to outperform wider ranges.

## **Risks**

* During times of high volatility in the markets, the allocation of assets could vary quite significantly from 50/50.
* In a low-volatility environment, wider ranges may earn less in fees and underperform concentrated strategies.
* In a high-volatility environment, concentrated ranges will incur more divergence loss and rebalancing costs.