The Importance of Liquidity Concentration It is natural that the yield varies depending on how much money is concentrated in one place and how concentrated the LP is. Maximizing this is one of the important factors in capital efficiency. There are various additional factors such as what the fee rate is and how much slippage there is, but ultimately, the key to LP farming is how much you can concentrate and extract within a single range. LP farming carries the same risks as trading, but since it involves buying and selling across various price ranges, if you can read the ranges well, it can yield better results than just trading randomly. When trading in the future, considering where these LPs are concentrated can serve as a good indicator for identifying where whales are moving capital. Taking Aptos as an example, below is the dlmm LP pool supplied through Hyperion, where you can see that most of the bids are provided as LP between 4 and 6. If you trade outside this range, it...
Show original
3.71K
0
The content on this page is provided by third parties. Unless otherwise stated, OKX TR is not the author of the cited article(s) and does not claim any copyright in the materials. The content is provided for informational purposes only and does not represent the views of OKX TR. It is not intended to be an endorsement of any kind and should not be considered investment advice or a solicitation to buy or sell digital assets. To the extent generative AI is utilized to provide summaries or other information, such AI generated content may be inaccurate or inconsistent. Please read the linked article for more details and information. OKX TR is not responsible for content hosted on third party sites. Digital asset holdings, including stablecoins and NFTs, involve a high degree of risk and can fluctuate greatly. You should carefully consider whether trading or holding digital assets is suitable for you in light of your financial condition.