Strategy Design

Our Strategy for operation

1) Neutral Strategy

  • Ensure token ratio of 50 50 in vault

  • LP position deployed symmetrical around current price

2) Bullish Strategy

  • Ensure token ratio of 60 40 or 70 30 token0 : token1, depending on risk profile

  • All token 1 and some token 0 deployed in LP symmetrical around current price (base position)

  • Remaining token 0 deployed in LP just above market price (limit position)

  • Fee earning is maximised if price of token0 is in upward trend

2) Bearish Strategy

  • Ensure token ratio of 40 60 or 30 70 token0 : token1, depending on risk profile

  • All token 0 and some token 1 deployed in LP symmetrical around current price (base position)

  • Remaining token 1 deployed in LP just below market price (limit position)

  • Fee earning is maximised if price of token0 is in downward trend

Once price limit of LP position is hit, rebalance vault immediately to mitigate impermanent loss. Vault is rebalanced to follow target token ratio.

Note:

  • If users deposit 100% of one token, they will still be exposed to the same risk as the ratio of the vault assets (i.e. for Neutral Strategy, risk is the same as if they had deposited 50 50 token ratio since we swap for them). Possible to end up with less dollar value at withdrawal compared to what they deposit if price movement is unfavourable, even with fees earned.

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