# Liquidity Scenarios

{% hint style="info" %}
We have simulated a few calculations to give you a better understanding of how concentrated liquidity works under constant management, static range, and wide range strategies
{% endhint %}

Let’s assume the TON/USDT price starts at 6.00 USDT per TON. An LP deploys a position at the center price of $6.00, with a narrow price range of $5.40 to $6.60. If the price goes beyond this range, the LP redeploys the position, adjusting the price boundaries.

**Active LP competes with a few other strategies**:

1. **Static**: Deploy and forget. The price range and center are fixed
2. **Wide-range**: Uses a broader price range ($4.80 to $7.20)

The initial value of assets is $1000.

This simulation **does not account for LP rewards**. It solely focuses on the impermanent loss and value changes of the assets in different scenarios.

## Scenario #1: Upwards Momentum

The price increases by 10% twice (to 7.26 USDT per TON), triggering the LP to rebalance once.

• **Active LP** (Rebalances at 6.60 USDT, setting new range 5.94-7.26 USDT): **$1049.40 (+4.94%)**

• **Static LP** (No rebalancing): **$1024.40 (+2.44%)**

• **Wide-range LP**: **$1050.00 (+5.00%)**

The active LP beats the static narrow-range LP, but loses to wide-range strategy.

## Scenario #2: Downwards Momentum

The price decreases by 10% twice (to 4.86 USDT per TON), triggering the LP to rebalance once.

• **Active LP** (Rebalances at 5.40 USDT, setting new range 4.86-5.94 USDT): **$867.28 (-13.27%)**

• **Static LP** (No rebalancing): **$846.62 (-15.34%)**

• **Wide-range LP**: **$867.77 (-13.22%)**

The active LP loses less than the static LP, but is still outperformed by wide-range LP.

## Scenario #3: Oscillations

Price moves up to 6.60 USDT and then back to 6.00 USDT

• **Active LP** (Rebalances once at 6.60 USDT): **$954.00 (-4.6%)**

• **Static LP** (No rebalancing): **$1000.00 (0.0%)**

• **Wide-range LP**: **$1000.00 (0.0%)**

In this scenario, the active LP strategy results in a permanent loss, while the static and wide-range LP strategies maintain the initial asset value.

<mark style="background-color:yellow;">This simulation highlights the importance of choosing the right liquidity strategy based on market conditions and personal risk tolerance.</mark>


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