Choosing a Strategy
The table below shows the PnL of various positions relative to the 50:50 HODL position, under decreasing️️ 📉, mean-reverting️, and increasing️ 📈prices. “Cash” means a position in stablecoins.
Expected profits relative to a 50:50 HODL position as a benchmark
Research & Provide Liquidity Wisely
Once you become a TONCO DEX investor, you get responsibility for your deposit. Thus, it is highly important to conduct deep research before supplying liquidity. Pay special attention to the following aspects.
- Tokens volatility
The pool that consists of non-stable tokens (like GRAM/USDT) is more likely to be affected by impermanent loss. But it doesn't mean that such types of pools are not worth the investments because other factors also play a role: total amount in the pool, trading fees, and trading activity. - Market tendencies
The general market moods directly impact trading volumes and price changes. - Amount in the pool
The more liquidity in the pool, the less sensitive liquidity provider will be to the impermanent loss. - Price range
The narrower the price range, the more likely a permanent loss will occur because it is more likely to exit the narrow price range than a slightly larger one. On the other hand, the narrower range means greater capital efficiency, which in turn, can cover the impact of impairment loss.
Apply your own strategy based on analyses and profit from concentrated liquidity on TONCO.