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Static Super Wide Strategy

Basic Overview​

The Static Super Wide Strategy is an incredibly simple design that mimics Uniswap V2 style price support with improved efficiency. Just a single position is made that is very wide. This width is fixed and is typically wider than necessary even in black swan type market movements. The goal of a strategy like this is to make the underlying asset ratio extremely predictable, so that pricing the LP token is consistent over time. This consistency is very helpful in bonding programs where the LP token is traded more for the underlying assets it represents.

Ideal Applications​

Markets where a V2 style distribution is desired, or for consistently predictable LP token share price for use in programs like Smart Bonds.

Strategy Details​

The Static Super Wide Strategy operates by creating a position centered on a provided center point and the width is defined as a percentage of the total feasible price range of the CLAMM.

Technical Explanation​

The Static Super Wide Strategy uses two main parameters in determining its positioning:

Configuration Parameters​

  1. Starting Tick:

    • The center of the liquidity position
    • Often the current tick of the pool is used here, this is more to align the position on a grander scale to be in the right section of the feasible tick range.

  2. Percent of Max Range:

    • a value 0 > n > 1 that represents the percent of the full range of ticks on the CLAMM
    • 0.5 is popular, but values as low as 0.16 are still extremely conservative for maintaining the asset ratio.

What is the Max Range?​

For most CLAMMs - Uniswap V3 and Algebra based pools - the price ratio of the two assets is tracked as a tick value. When a liquidity position is made the range is determined in these ticks. This gives the pool certain composable points to track accounting between. There is a limit to this tick range which goes from -887272 to 887272, or a 1 to ±3.4e38 price ratio. This price range is massive, and most token pairings will not use most of this range. A V2 style liquidity position would cover this whole range, however this is overkill given that the biggest lifetime price movements traverse roughly 8% of this range. Hence a position set to 16% of the max range would be able to support the entire rise of Bitcoin and the fall of Terra Luna simultaniously. This gives increased liquidity efficiency while maintaining a similar risk profile.

info

Learn more about ticks in Uniswap's V3 whitepaper

Implementation Considerations​

  • The strategy is static, while it is unlikely the price will leave the position range the possibility should be considered
  • Narrower widths will result in higher fees earned, but increases risk by a small degree

Alternatives​

If the main goal is having a consistently priced asset there are other strategies that can provide similar results:

  • Classic Rebalance: this might be a good option in large pools with plently of counter liquidity. This strategy can be configured incredibly wide to get a similar result
  • Fluid Liquidity: this strategy can also be configured incredibly wide with the default position width, this with the full range sprawl option gan give similar results