Basic Price Range Presets
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.
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