How do I add TraderJoe liquidity

23-03-27 13:57

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Original article by TraderJoe@traderjoe_xyz

Arbitrum airdrop led almost, the price will be near the current price game in the short term, one of the best strategies may be to eat the income of the liquidity pool.TraderJoe981% APR is the highest I've seen. Thanks to its efficient liquidity model, since Arbitrum, the data also rose quickly.

There are six common ways to add Traderjoe liquidity. Here's how to add TraderJoe liquidity.

1) Spot-Concentraded:

Liquidity will be concentrated in 1-3 barrels, and the range of liquidity is very narrow, suitable for adding trading pairs with minimal volatility such as stablecoin pairs. The upside is high capital efficiency, the downside is that if the price deviates from the range, there will be severe IL.

2) Spot-Spread:

Distributing liquidity evenly to 20-30 barrels is a good capital efficiency, as long as the price moves within a set range. If you deviate, you have a higher IL. A currency suitable for short-term fluctuations in a certain price.

3) Spot-UltraWide:

Liquidity is placed in more than 200 barrels, forming a wide price range coverage, so capital utilization is also low, suitable for currencies with more volatile prices.

4) Wide:

Slightly more capital efficient than Ultrawide, with liquidity of around 50 barrels, suitable for currencies with less price volatility than Ultrawide.

5) Curved:

It is a bit like the bell curve of normal distribution, which is suitable for currencies that fluctuate back and forth around a certain price. If they deviate from the middle price, there will be a relatively large IL loss. Because of its similar structure to the orderbook on the CEX Exchange, it is a good fit for market making bots to provide liquidity.

6) Bid-Ask:

The antithesis of the Curved form, with liquidity concentrated at both ends of the middle price, suits market makers who are bullish on volatility.

To sum up:

Retail investors are advised not to try the last two ways of providing liquidity, Concentrated for stable coins, concentrated for non-stable coins, Ultrawide for maximum volatility, Wide for medium range and Spread for small range, based on your judgment on price fluctuations. For me, I choose Spread for Arb-ETH trade, or Wide if I am afraid of IL.