Swap & LP Strategies with Price Ranges

Note for DEX Teams:

Advanced swap mechanics that turn users into liquidity strategists. This section explores how traders can use range-based strategies like Range Orders, Dollar Cost Averaging, and Covered Calls—not only to trade, but to earn.

Illustrations are from general Algebra onboarding materials and should be adapted to the specific DEX UI for final deployment.

Algebra-powered DEXs introduce concentrated liquidity, enabling liquidity providers to optimize capital efficiency and actively manage positions. Whether you aim to earn more from fees, accumulate assets, or automate your exit strategy, here are four foundational strategies to get you started.

1. APR-Focused Strategy

This strategy aims to maximize fee generation by maintaining a tight liquidity range around the current price. Since concentrated liquidity is only active when the price is within range, narrower bands mean higher capital efficiency and more fee income.

How to apply it:

• Select high-volume trading pairs with stable performance.

• Use narrow price bands and monitor trading volume, TVL, and fee APR charts.

• Regularly rebalance to keep your position within the active trading zone.

Best for: Active LPs focused on yield optimization rather than asset appreciation.

2. Range Order Strategy (Buy/Sell)

A Range Order is similar to a limit order—but instead of paying a fee to execute a trade, you earn fees while waiting.

• Sell Strategy: Provide single-sided liquidity in the volatile asset (e.g., a token like XYZ) above the current price. If price rises into the range, your tokens convert to the stable asset (e.g., USDC) while earning fees.

• Buy Strategy: Deposit stablecoins below the current price. If the price drops into the range, the stablecoins convert into the volatile token as it becomes cheaper.

Think of it as a limit order that pays you instead of charging you.

3. Dollar Cost Averaging (DCA)

DCA with liquidity ranges allows you to accumulate or distribute tokens gradually, regardless of market direction. The wider the range, the more gradual your entry/exit—and the more time your liquidity stays active.

• Sell DCA: Provide volatile assets within a broad upward price range. As price rises, your position gradually converts to stablecoins, distributing the token over time.

• Buy DCA: Provide stablecoins across a lower range. As price declines, your stablecoins accumulate the token gradually.

Best for: Users who prefer a longer-term, passive strategy while still earning swap fees.

4. Covered Call (Sell Focus)

This strategy mimics the mechanics of a covered call option, enabling you to earn premiums while setting a predefined exit price.

• Provide single-tick liquidity (very narrow range) in the volatile token just above the current market price.

• When the price enters your range, your asset converts to stablecoins and you capture fees—just like collecting an option premium.

To secure profits and avoid reversal, withdraw your liquidity once the price target is reached.

Ideal for: Traders with a defined exit target and a desire to earn passive fees along the way.

Summary

Strategy	Market Bias	Fee Focused	Asset Accumulation	Active Mgmt
Strategy	Market Bias	Fee Focused	Asset Accumulation	Active Management
APR-Focused	Sideways	✅ Yes	❌ No	❗️ High
Range Order	Directional	✅ Yes	✅ Yes	⚠️ Medium
DCA	Neutral/Flexible	✅ Yes	✅ Yes	✅ Low
Covered Call	Bullish Exit	✅ Yes	❌ No	⚠️ Medium