Range Presets
Last updated
Last updated
Liquidity providers allocate their crypto to a specific price range. They set the range between the highest and lowest prices where their liquidity will be used.
TONCO provides presets for selecting a range: Narrow, Common, Wide, and Full. The Full range simulates V2 behavior, allowing LPs to cover the entire price spectrum.
Narrow Range: -5% to +10% of the current price.
Common Range: -10% to +20% of the current price.
Wide Range: -20% to +40% of the current price.
High Fee Generation: Generate more fees due to concentrated liquidity.
Constant Monitoring: Require frequent rebalancing to stay within the active range.
High Impermanent Loss: Heavily exposed to rapid price movements and IL.
Lower Fee Generation: Generate fewer fees as liquidity is spread out.
Less Frequent Rebalancing: Require less manual intervention.
Reduced Impermanent Loss: Less affected by price movements.
The volatile category applies to most pairs, where a a project token paired with TON or USDT.
If you’re concentrating liquidity on a volatile pair (like TON/USDT), you run the risk of your position falling out of range. If your position falls out of range, you’ll need to rebalance. Rebalancing costs you in swap fees, slippage and gas.
For a concentrated position on a low volume pair, it’s very unlikely that the gains from trading fees will exceed the loss from impermanent loss.
For these two key reasons, it’s likely that setting a wide range is the dominant option for low and mid volume volatile pairs.
On higher volume pairs (like TON/USDT) you can consider narrower ranges to maximize profit. By “high volume” we mean the point at which the LP fees exceeds the costs of impermanent loss and rebalancing.
These pairs involve assets with stable prices relative to each other (e.g., USDT/AquaUSDT, TON/stTON).
Notably, pegged pairs all but eliminate the risk of impermanent loss. Of course, if the peg breaks, that’s a different story.
You have an AquaUSD/USDT position centered at $1 with a ±0.1% range.
AquaUSD drops to $0.98. Your entire position shifts to AquaUSD.
Instead of waiting for AquaUSD to recover, you decide to act.
Close Position: Withdraw your current position.
Rebalance Assets: Swap 50% of your AquaUSD to USDT.
Open a new position centered at $0.98 with the same ±0.1% range to maximize fee collection.
AquaUSD returns to $1, you close the $0.98 position, swap assets back, and reopen a position centered at $1.
A single relocation reduces the liquidity of the position by approximately 1%, since sqrt(0.98) ~= 0.99. You better hope that the LP fees collected during the single day is grater than 2% of the principal. Otherwise it would have been better to keep the initial position unmoved.
Generally, LPs should be comfortable setting a narrow range. Perhaps as narrow as a 0.1% price deviation on each side of the pegged price (and possibly even narrower). For lower volume pairs, a slightly wider range might be necessary to account for minor depegging.
