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arXiv · 2405.18728

A Tick-by-Tick Solution for Concentrated Liquidity Provisioning

Corinne Powers
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Abstract

Automated market makers with concentrated liquidity capabilities are programmable at the tick level. The maximization of earned fees, plus depreciated reserves, is a convex optimization problem whose vector solution gives the best provision of liquidity at each tick under a given set of parameter estimates for swap volume and price volatility. Surprisingly, early results show that concentrating liquidity around the current price is usually not the best strategy.

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Corinne Powers. 2024-05-29. A Tick-by-Tick Solution for Concentrated Liquidity Provisioning. https://arxiv.org/abs/2405.18728

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