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Strategies

A discussion of the various strategies used by Gamma.

Currently Used Strategies

Dynamic Range

From Uniswap Labs

Description

Liquidity ranges are automatically rebalanced when certain rebalance triggers are hit. Liquidity ranges can be set for a pair, and rebalances are automatically triggered by the price moving a certain percentage one way or another.

Applicable Pool Types

A stable-stable, stable-volatile, or volatile-volatile asset pair.

Example Hypervisors

WBTC-WETH Pair 0.05% - Mainnet agEUR-WETH Pair 0.05% - Mainnet WETH-USDC Pair 0.05% - Optimism USDC-WETH Pair 0.05% - Polygon

Advantages

Accrued fees will be compounded back into the position regularly on behalf of LPs compounding yield. Auto-rebalancing allows for a passive LP experience.

Risks

Upon each rebalance, price ranges are set at a fixed range of the current price, and asset allocations could vary from 50/50.

Stable Strategy

From ChartEx

Description

Liquidity ranges are aimed to straddle one asset at various ranges depending on backtesting results. For more volatile stablecoin pairs, wider ranges will be used. For blue-chip stables, narrower ranges will be used.

Applicable Pool Types

A stable-stable asset pair

Example Hypervisors

USDC-DAI 0.01% - Optimism sUSD-DAI 0.05% - Optimism USDC-FRAX 0.05% - Polygon

Advantages

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

Risks

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

Pegged Price

From Gamma / Rocket Pool

Description

Liquidity is provided directly around the net asset value of a provided asset.

Applicable Pool Types

A wrapped, staked ETH derivative asset will be provided only within a fixed range around its net asset value.
Example Hypervisors
rETH-WETH 0.05% - Mainnet

Advantages

As the net asset value hits certain price targets, the liquidity position will be automatically rebalanced.

Risks

During high market volatility, the actual market price can go out of range, and the position will not earn fees.