A discussion of the various strategies used by Gamma.
From Uniswap Labs
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.
A stable-stable, stable-volatile, or volatile-volatile asset pair.
WBTC-WETH Pair 0.05% - Mainnet agEUR-WETH Pair 0.05% - Mainnet WETH-USDC Pair 0.05% - Optimism USDC-WETH Pair 0.05% - Polygon
Accrued fees will be compounded back into the position regularly on behalf of LPs compounding yield. Auto-rebalancing allows for a passive LP experience.
Upon each rebalance, price ranges are set at a fixed range of the current price, and asset allocations could vary from 50/50.
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.
A stable-stable asset pair
USDC-DAI 0.01% - Optimism sUSD-DAI 0.05% - Optimism USDC-FRAX 0.05% - Polygon
Accrued fees will be compounded back into the position regularly on behalf of LPs compounding yield.
During times of high volatility in the markets, the allocation of assets could vary quite significantly from 50/50.
From Gamma / Rocket Pool
Liquidity is provided directly around the net asset value of a provided asset.
A wrapped, staked ETH derivative asset will be provided only within a fixed range around its net asset value.
rETH-WETH 0.05% - Mainnet
As the net asset value hits certain price targets, the liquidity position will be automatically rebalanced.
During high market volatility, the actual market price can go out of range, and the position will not earn fees.