Stable Pool Strategy for Uniswap v3
This strategy is meant for providing liquidty on Uniswapv3 0.01% pool fee stable pairs.
The Uniswap v3 platform allows users to create liquidity pools between two tokens with different decimal precisions. Each pool is divided into a range of ticks, with each tick representing a price point between the two tokens. The price of each token pair is determined by the position of the tick on the range.
To provide liquidity on a Uniswap v3 pool, users can add their funds to the pool and receive a portion of the trading fees collected by the platform. The amount of fees earned depends on the amount of liquidity provided and the trading volume on the pool.
The strategy outlined above involves calculating the theoretical tick for a given stable pair based on their decimal precisions. This theoretical tick represents the mid-price of the pair and is used as a reference point for the position of the liquidity provided.
The strategist can then set an offset based on the current liquidity distribution of the pool. This offset determines how far from the theoretical tick the positions will be made on each side of the pool. The idea behind this offset is to take advantage of any imbalances in the pool liquidity to maximize trading fees earned.
The variance field is another parameter that allows for additional fine-tuning of the liquidity positions. It determines how far from the theoretical tick the liquidity positions can deviate on each side. This parameter can be used to adjust the risk-reward ratio of the liquidity provision strategy.
The positions are weighted to form a standard normalized curve, which means that the liquidity provided is spread evenly across the tick range. This helps ensure that the positions are not concentrated in a single area of the pool, which could result in missed trading opportunities.
It's worth noting that this strategy is static, meaning that the offset and variance cannot be changed after configuration. However, it's possible that future versions of the platform will allow for more dynamic liquidity provision strategies.
Overall, the goal of this strategy is to provide liquidity on Uniswap v3 stable pairs in a way that maximizes trading fees earned while minimizing risks.
We are nearing the launch of our project, and soon we will make the repository publicly available.
The execution of the bundle essentially refers to the calculation of these values, which are then handled by the Steer Protocol.