Pool Sponsor Strategies
You're the representative of a DeFi or NFT project (or even a CeFi project!) and you want to incentivize Uniswap V3 liquidity for your native token, or perhaps one of the other tokens in your ecosystem. There are a couple of ways you might consider configuring your Terminal presence.
Full Range, Single Pool
This is likely the most common strategy that teams will employ. In this case, you incentivize a single pool, using the full price range for the two tokens in the pair. This is both convenient and sustainable, as, no matter the price action, the pool will always be in range.
Concentrated Range, Single Pool
In the case of a more stable asset pair, where relative price between the two assets is more predictable, using a concentrated price range may be advisable. A concentrated range has the benefit of making deposited liquidity more capital efficient, as LPs are not deploying capital in the ranges of the pricing curve that are unlikely to be utilized. In the case that the price does end up moving out of the concentrated range, the pool sponsor runs the risk of incentivizing unusable capital, at least until the price returns to the designated range.
Mixed Strategy, Multiple Pools
Many projects will find it useful to incentivize two or more pools, each with different price ranges. One example of this is a project incentivizing one pool over the full Uniswap price range and one pool with a more concentrated range focused around the current price. This mixed strategy has the benefit of reducing the risk of a concentrated strategy while also enhancing liquidity around the current price.
Do you have some other strategy in mind? There are many viable possibilities to be sure. Get in touch with us in Discord if you need someone to bounce ideas off of.
Last modified 1yr ago