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Liquidity ProvidersPassive Liquidity Provisioning

Passive Liquidity Provisioning

Many LPs want an easier way to provide liquidity. They wanted a lower-risk, low-maintenance way to generate yield without constantly adjusting positions or watching charts.

Passive liquidity provisioning is for:

  • Passive investors seeking consistent returns
  • Stablecoin holders looking to put idle funds to work
  • Institutional or retail users interested in low-risk exposure

Automated Stablecoin Strategies (ASS)

LPs can deploy funds from their account into a trading strategy, which will automatically create and manage limit orders on their behalf. Each deployed strategy is assigned a unique id and in many ways is treated like a regular LP account by the protocol, e.g. it has its own account balance and starts with cF.... The strategy will then automatically manage the orders in the pool by opening/closing/updating them according to the strategy’s rules and parameters. When a strategy is closed, all of its orders are cancelled and the funds are returned to the LP.

One positive side effect of these strategies is that they can provide a very tight and predictable spread for swaps. Always having a strategy that is willing to buy and sell at a tight spread, the active LP’s are forced to compete with the strategies, which leads to better pricing for users.

Supported Strategies

Using the Live price as a center point, this strategy tries to keep a 50/50 split of value on both sides by placing orders in a band around the oracle price. This is the same as the Inventory Based strategy, except it uses a live oracle price instead of assuming a fixed 1:1 peg.

Every block the strategy reads the oracle price of base_asset relative to quote_asset, converts it to a tick, and uses it as an offset when placing orders.

  • When one side holds more than half of the total inventory, that side is split into two orders: an anchor order at the average of the side’s tick band holding half the total, plus a dynamic order at a more aggressive tick (towards the band edge) holding the surplus.
  • When a side holds less than half of the total inventory, it places a single dynamic order at a more defensive tick.

The dynamic tick moves within the configured band in proportion to how lopsided the inventory is, which nudges the portfolio back towards a 50/50 split over time. Splitting the surplus across two orders (rather than placing it all at the most aggressive tick) avoids the inventory ping-ponging back and forth in an unprofitable loop. Instead, when the aggressive order is fully filled, it will perfectly balance out the inventory.

Orders are refreshed when the strategy’s free balance grows past the update threshold, or when the oracle price moves enough to shift the target ticks. If the oracle price is stale, all open orders are cancelled and the strategy waits until a fresh price is available.

Name: OracleTracking Parameters:

  • min_buy_offset_tick: Tick — lower bound of the buy-side band, relative to the oracle tick.
  • max_buy_offset_tick: Tick — upper bound of the buy-side band, relative to the oracle tick.
  • min_sell_offset_tick: Tick — lower bound of the sell-side band, relative to the oracle tick.
  • max_sell_offset_tick: Tick — upper bound of the sell-side band, relative to the oracle tick.
  • base_asset: Asset — the asset to market-make; must have a supported oracle price feed.
  • quote_asset: Asset — the quote asset, which must be USDC.

The tick ranges must satisfy min_buy_offset_tick ≤ max_buy_offset_tick, min_sell_offset_tick ≤ max_sell_offset_tick, and the buy and sell bands must not overlap aggressively (min_sell_offset_tick ≥ the average buy offset tick and max_buy_offset_tick ≤ the average sell offset tick).

Inventory Based

A market-making strategy for stable / pegged pairs that tries to keep the strategy balanced with a 50/50 split of value on both sides.

  • When one side holds more than half of the total inventory, that side is split into two orders: an anchor order at the average of the side’s tick band holding half the total, plus a dynamic order at a more aggressive tick (towards the band edge) holding the surplus.
  • When a side holds less than half of the total inventory, it places a single dynamic order at a more defensive tick.

The dynamic tick moves within the configured band in proportion to how lopsided the inventory is, which nudges the portfolio back towards a 50/50 split over time.

Name: InventoryBased Parameters:

  • min_buy_tick: Tick — lower bound of the buy-side band.
  • max_buy_tick: Tick — upper bound of the buy-side band.
  • min_sell_tick: Tick — lower bound of the sell-side band.
  • max_sell_tick: Tick — upper bound of the sell-side band.
  • base_asset: Asset — the non-USDC asset to market-make (must share USDC’s decimals).

The tick ranges must satisfy min_buy_tick ≤ max_buy_tick, min_sell_tick ≤ max_sell_tick, and the buy and sell bands must not overlap aggressively (min_sell_tick ≥ the average buy tick and max_buy_tick ≤ the average sell tick).

Simple Buy Sell

A simple asymmetric strategy that trades in the base_asset/USDC pool, creating a buy order at buy_tick and a sell order at sell_tick. When a threshold amount is filled, the strategy will automatically update the orders to re-use the filled funds, keeping utilization high.

Name: SimpleBuySell Parameters:

Buy and sell ticks must satisfy buy_tick < sell_tick.

Zero Centered

A simple symmetrical strategy that trades in the base_asset/USDC pool, creating sell and buy orders at ticks 0+spread_tick and 0-spread_tick, respectively. When a threshold amount is filled, the strategy will automatically update the orders to re-use the filled funds, keeping utilization high.

Name: TickZeroCentered Parameters:

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