Risk Management

Impermanent Loss Considerations

Concentrated liquidity can amplify impermanent loss since positions are focused on specific ranges. Mitigation strategies include:

  • Diversification: Spread positions across multiple ranges and pairs

  • Stable Pairs: Use stable-coin pairs for lower volatility exposure

  • Active Management: Monitor and adjust positions based on market conditions

Best Practices

  • Range Selection:

    • Historical price data

    • Expected volatility

    • Trading volume patterns

    • Market sentiment

  • Position Sizing

    • Allocate capital proportionally to risk tolerance and market analysis

  • Monitoring

    • Regular position review and adjustment to maintain optimal performance

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