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.