LP Trading Strategies
LP Trading strategies leverage the system of concentrated liquidity of V3 pools and combine it with trading principles.
These strategies provide liquidity in one asset to maximize or minimize exposure to one of the assets. This heavily decreases the impermanent loss but increases the effect of price on the strategy performance.
Stable-Volatile pool (eg. ETH-USDC)
When the volatile asset's price increases, it provides the liquidity in the volatile asset to benefit from the price movement. When the price decreases, it provides liquidity in the stable asset to limit the exposure to the price of the volatile asset.
The strategy benefits from price movement as well as the generated pool fees.
Volatile-Volatile pool (eg. BTC-ETH)
The liquidity is deposited in the asset which price increases faster or decreases slower
The strategy benefits from price movement as well as the generated pool fees.
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