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      • Ranged Liquidity
        • Comparison with Basic position
        • Liquidity Amplification Factor
        • Possibility of Change to a Single-Coin position
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  1. Introduction
  2. Crescent DEX
  3. Ranged Liquidity

Liquidity Amplification Factor

A ranged position with price range from 0.8 to 1.2 in the above example provides the liquidity only in the range. Since the ranged pool does not provide the liquidity outside of the range, its liquidity is concentrated in the range. Compared to the basic position with the same capital, the ranged position with [0.8, 1.2] range provides liquidity 10 times greater than the basic position in the price range. This value of 10 is the liquidity amplification factor of the ranged position. The liquidity amplification factor depends on the price range. As it can be seen below, the liquidity amplification factor increases as the size of the range is getting smaller.

Current Pool Price
Min Price
Max Price
Liquidity Amplification Factor

1

0.8

1.2

10.38

1

0.9

1.1

20.44

1

0.98

1.02

100.49

1

0.99

1.01

200.49

1.079

1.063

1.15

51.54

For a ranged pool with Pmin, Pmax and P as the minimum price, maximum price and current pool price, the amplication factor (AMP) can be calculated as

AMP=11−12(PminP+PPmax)AMP=\frac{1}{1 - \frac{1}{2}\left(\sqrt{\frac{P_{min}}{P}} + \sqrt{\frac{P}{P_{max}}} \right)}AMP=1−21​(PPmin​​​+Pmax​P​​)1​

Note that Pmin≤P≤PmaxP_{min}≤P≤P_{max}Pmin​≤P≤Pmax​

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Last updated 1 year ago