Basic Price Range Presets

Note for DEX Teams:

This section introduces price range presets use in concentrated liquidity provisioning.

Use this section to help your users understand:

• How to set custom price ranges

• The difference between full-range vs. narrow-range provisioning

The examples below use Algebra’s standard testnet UI and onboarding materials, designed to illustrate key mechanics. These materials are to be recreated and adapted to match the final UI and UX of your DEX product.

When providing liquidity, users allocate their assets to a specific price range — defined by the upper and lower bounds where their liquidity will remain active. This approach is central to concentrated liquidity AMMs and enables capital efficiency.

Available Presets

To simplify this experience, DEXs built on Algebra can offer preset ranges designed for different user needs and risk appetites. These include: Narrow, Common, Wide, and Full Range options.

• Narrow Range Example: –5% to +10% of current price

  Designed for advanced LPs aiming to maximize fee generation through high concentration. Requires active management.

• Common Range Example: –10% to +20%

  Balanced option for moderate fee income and risk. Suitable for users with some DeFi experience.

• Wide Range Example: –20% to +40%

  Offers reduced exposure to impermanent loss and less frequent rebalancing. Good for more volatile pairs or passive LPs.

• Full Range Covers the entire price spectrum

  Emulates V2-style passive LPing. Simplest for new users but less capital-efficient.

Narrow vs Wide Ranges

Narrow Ranges

• High Fee Generation: Generate more fees due to concentrated liquidity.

• Constant Monitoring: Require frequent rebalancing to stay within the active range.

• High Impermanent Loss: Heavily exposed to rapid price movements and IL.

Wide Ranges

• Lower Fee Generation: Generate fewer fees as liquidity is spread out.

• Less Frequent Rebalancing: Require less manual intervention.

• Reduced Impermanent Loss: Less affected by price movements.

Choosing the Right Range

For Volatile Pairs

Pairs like ETH / USDT or ARB / USDT generally experience frequent price fluctuations. In these cases:

• Wide ranges are often ideal for low to mid-volume pairs, reducing rebalancing needs and impermanent loss.

• Narrow ranges may be profitable only on high-volume pairs, where trading fees are sufficient to outweigh risks and maintenance.

💡 Tip for users: Rebalancing a narrow position frequently incurs gas fees, slippage, and opportunity costs. Consider passive ranges unless confident in active management.

For Pegged Pairs

Pegged or stable pairs (e.g., USDT / USDC, stETH / ETH) are generally low-risk in terms of impermanent loss.

• Very narrow ranges (e.g., ±0.1%) are viable due to tight price correlation.

• In the event of a minor depeg, LPs can:

  • Close the position

  • Swap to rebalance

  • Reopen at the new price center

This strategy is only profitable if collected fees exceed the cost of repositioning. In low-volume environments, a slightly wider preset might be more practical to reduce management friction.