Strategies & Use Cases

Through allocating different amounts of tokens at diverse price points, we are able to build a desired liquidity shape with the DLMM that best fits our LP goals.

Spot: Provides a uniform distribution of liquidity that is flexible and suitable for any type of market and conditions. It is the most straightforward volatility strategy to deploy for new LPs who want to rebalance their position less frequently. This is similar to setting a CLMM price range.
Curve: Ideal for a concentrated approach that aims to maximize capital efficiency by allocating capital mostly in the middle of your price range. This is great for stables or pairs where the price does not change very often.
Bid-Ask: Bid-Ask is an inverse Curve distribution, where most of your capital is allocated towards both ends of the range. This strategy can be used to capture bigger volatility swings away from the current price. Bid-Ask is more complex than Spot and may require more frequent rebalancing to be effective, but has a high potential for fee capture during situations where prices fluctuate wildly around the current price. Bid-Ask can also be deployed single sided for a DCA in or out strategy.

Basic Strategies

Strategy

Advantages

Disadvantages

Considerations

Curve

Capital-efficient deployment of liquidity

Ideal for calm markets

Increased risk of impermanent loss

To achieve optimal effectiveness, it's necessary to consistently rebalance based on the current price.

Bid-Ask

Captures market volatility Great for DCA in/out of positions

Riskier than other positions

Requires rebalancing to remain efficient

Spot-Concentrated

Liquidity equally deposited between 1-3 bins

Ideal for Stablecoin pairs Maximises assets efficiency

Highest risk of Impermanent Loss when price leaves the bin range

If used in volatile pairs for capturing greatest amount of fees, make sure to monitor very closely as this strategy has highest risk of Impermanent Loss.

Spot-Spread Liquidity equally deposited between 20-30 bins

Very capital-efficient strategy Expect to stay in range for small intra-day volatility

High risk of Impermanent loss

Make sure to monitor position at least on a daily basis.

Spot-Wide Liquidity equally deposited between 50 bins

Lower risk of impermanent loss Ideal for LPs who do not wish to regularly monitor price action

Reduced capital efficiency since capital is spread over a larger range.

Although capital-efficiency is lower than the other shapes above, in general, it is still better than x*y=k exchanges