Pegged Pair Strategy

Strategy One (Constant price, non-rebalancing)

Description

Liquidity ranges are set at various bin positions surrounding the actively trading price range of the pair depending on backtesting results. For more volatile pegged pairs, wider liquidity ranges will be deployed. For less-volatile pairs, narrower liquidity ranges will be deployed.

Applicable Pool Types

Stable-stable asset pairs frequently trading out of parity or pegged pairs trading around a constant price.

Example Pools: WBTC.e-BTC.b

Advantages

• Accrued fees will be compounded back into the position regularly on behalf of LPs compounding yield.

• The strategy will enable LPs to capture a large range of profitable swap fees.

• The strategy is non-rebalancing to mitigate the impacts of IL.

Risks

• During times of high volatility in the markets, the allocation of assets could vary quite significantly from 50/50.

Strategy Two (Proportional price, rebalancing)

Description

In this strategy, liquidity is deployed at a determined interval around the Net Asset Value (NAV) of the token. As the NAV of the token increases the strategy is automatically rebalanced to a higher price to continuously facilitate liquidity. A rebalance is triggered as the NAV increases by a predefined amount.

Applicable Pool Types

Related asset pairs which do not trade at a constant value, but trade in close sequence.

Example Pools: sAVAX-AVAX

Advantages

• Accrued fees will be compounded back into the position regularly on behalf of LPs compounding yield.

• The strategy will enable LPs to capture a large range of profitable swap fees.

• The strategy will automatically rebalance to keep liquidity active.

Risks

• During times of high volatility in the markets, the allocation of assets could vary quite significantly from 50/50.

• During times of volatility if the token trades well bellow NAV APRs will be temporarily reduced and liquidity will be inactive until it begins trading in parity again.