Zyberswap
  • 👋Introduction
  • ♾️Roadmap
  • KEY FEATURES
    • 🪙Token Swap
    • 💧Liquidity Pools
    • 🚜Yield Farms
    • 🔥Burning Mechanism
    • 🌉Bridge and Cross-Chain Swaps
    • 🗽Governance Voting
    • 👥Referral Program
    • 🩸Concentrated Liquidity
    • 🏃‍♂️Active Liquidity Management
  • TOKENOMICS
    • ⚡ZYB Token
    • 🪙sZYB Token
  • LAUNCHPAD
    • 🚀#1 - AutoDCA
    • 🚀#2 - Synthswap
    • 🚀#3 - Brightpool Finance
    • 🚀#4 - Hextopus
  • Get Started
    • 🛠️Getting Started
      • 1️Connect Wallet
      • 2️How to Swap
      • 3️How to add Liquidity
      • 4️How to Farm
      • 5️How to Stake ZYBER Earn ETH
      • 6️How to use Vaults
      • 7️How to remove Liquidity from 3pool
  • 🌊Concentrated liquidity - V3
    • 1️⃣How to add Liquidity?
    • 2️⃣How to Farm?
    • 3️⃣How to remove Liquidity?
    • 📺Video tutorial - Farming
    • 🏃‍♂️How to use ALM in v3
    • 1️How to Add Liquidity to Gamma pools
    • 2️How to deposit Gamma LP to Farm
    • 3️How to remove Gamma LP
  • 🪙Staked ZYB - sZYB
    • Ⓜ️How to Migrate to sZYB
    • 💵How to Allocate sZYB to Profit Sharing and Collect Rewards
  • SECURITY
    • 📄Smart Contracts
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  • What is Gamma?
  • Why is Active Liquidity Management needed for the Concentrated Liquidity?
  • What is Difference between Narrow and Wide pools?
  1. KEY FEATURES

Active Liquidity Management

ALM with Gamma

PreviousConcentrated LiquidityNextZYB Token

Last updated 2 years ago

By using Gamma's active liquidity management tools, users can benefit from automatic rebalancing of their liquidity to keep it within range and auto-compounding of generated swap fees to maximize capital efficiency.

Once you deposit your liquidity, Gamma takes care of the rest. Managing your liquidity has never been easier!

What is Gamma?

Gamma is a non-custodial protocol that offers automated and active management of concentrated liquidity. Through various management functions, including rebalancing, position setting, and fee processing, Gamma allows for the active management of funds within liquidity pools without sacrificing asset custody. These features are made possible through ongoing research and implementation of key strategies driven by data science and financial modeling aimed at delivering optimal results to customers.

Why is Active Liquidity Management needed for the Concentrated Liquidity?

ALMs are designed to address several challenges that exist in CL AMMs:

Complexity

CL AMMs provide greater capital efficiency than standard AMMs but are also more complex to manage. Users must understand different liquidity ranges, and associated risks, and deploy their capital with more steps. This complexity can be daunting for many users.

Higher Impermanent Loss

Another challenge with CL AMMs is the increased risk of impermanent loss due to the ability to concentrate liquidity. If the market price goes beyond the established price ranges, users face the maximum IL. Therefore, users must be mindful of their risk appetite and provide liquidity accordingly.

Active Position Management

To mitigate against impermanent loss, users must be active in managing their CL positions. This requires constant supervision to ensure that current prices do not go beyond the established ranges, or else they face the risk of maximum IL. This active management can be time-consuming and difficult for many users.

More work for Projects managing their own Liquidity

Additionally, projects looking to manage their own liquidity and engage in market-making activities will need to allocate more time and resources under a CL environment.

ALMs are focused on active management for CL AMMs to maximize fee generation, minimize impermanent loss, and automate the process of rebalancing users' positions. With ALMs like Gamma, users can outsource the active management of their liquidity in a trustless manner. This means that users can avoid the complexities of active management and benefit from a more streamlined and efficient process.

Composability

In CL, LP tokens are represented as an NFT, which hinders composability. However, with Gamma's ALM, LP positions will be manifested as ERC20 tokens, which are composable across DeFi. This means that LPs can deposit Gamma LP positions to Zyberswap's standard farms and benefit from the platform's other features.

What is Difference between Narrow and Wide pools?

Automatic Wide: less rewards from fees, however the Impermanent Loss will be smaller.

Automatic Narrow: more rewards from fees, however the Impermanent Loss can be higher.

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