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.

PreviousStable Strategy NextPegged Pair Strategy

Last updated 2 years ago

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.

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

Concentrated Dynamic Strategies (Coming Soon)

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.