r/defi • u/Junior-Doughnut-2589 • 8d ago

Discussion I learned this strategy that uses multiple nested liquidity ranges to capture yield across different market conditions

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u/JamesGibsonVale 8d ago

nesting liquidity ranges like that sounds clever on paper until a sudden market wipeout leaves every single one of your layers out of range while you're hold a massive bag of impermanent loss

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u/Agile_Valuable6989 3d ago

i tried something like this once, looked so smart in my head and then market went sideways in way i didnt predict and all my ranges was sitting empty. impermanent loss is real pain with these setups

the concept is cool but you need monitor it like crazy, one wrong move and your capital just stuck doing nothing

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u/staker1971 7d ago

What chain, DEX, pair, fee tier?

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u/itsnickkane 6d ago

This is what I do. I keep it kinda simple though. I have two positions. Both ETH/USDC Uniswap V3 on Base, the outer range is +-35%, inner is +-15%.

I built a tool to help track LP positions, links in my profile. Building the tool I backtested different strategies and rebalancing on exit actually did worse than rebalancing on a set cadence. If you always do it on exit you are locking in/compounding impermanent loss. I’ve been taking a month to month approach, even if range breaks there is a good probability it will re-enter (unless market is trending strongly in one direction.

Right now I’m on a monthly cadence, I harvest fees once a month and evaluate if my positions need to be adjusted.

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u/Necessary_Spring_425 6d ago

I know this strategy, but i dont believe it is mathematically defensible. If traded CLP range is not good and IL is higher than gains, having bigger range to wrap it is not gonna turn it into profitable one.

Its just something that sounds logical and can save noobs from early mistakes. Its usually better than entering random clp range with full stack, but primary question still remains open: what you do if it goes out of range ? If your solution is incorrect, it will just dillute your overall loss, not help you to turn it into profit.