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Monteluna
@monteluna
Spending some time revisiting the LVR paper, and it does provide a nice framework for hedging concentrated liquidity positions and valuing performance of an LP position. My only issue is, for the majority of crypto users, I don't think they should hedge their positions or use LVR! The paper does discuss this in the Loss-Versus-Benchmark section, I just think the benchmark should be the dollar amount in all of the non-USD token. People should be using Uniswap range orders when they want to go long a token without hedging. - If you want to buy $1000 of a token spot, make a range order with an appropriate range depending on the volatility. 15-25% on both sides of the current price could be an option. - If the position moves up and out of range, you made some money in fees and would be selling as the token moves up. - If the position moves down and out of range, you lost some money, but you lost less than you would have holding the $1000 spot. https://arxiv.org/abs/2208.06046
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Jordan
@jordansaping
Yep, LVR discussions are much more interesting than a lot of other defi discourse imo. It’s an actual problem—money left on the table— that theoretically has a solution, unlike IL which has neither. But where a lot of of LVR chads go wrong is assuming all onchain LPs think about LPing as some professional HFT market maker. Most LPs would be very happy with automatically executing/conditional range orders. The FLAIR paper is a great read as well!
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Monteluna
@monteluna
Yup. I want to take a look at it. I think a tldr of what I'm saying is: 1. Most people that are range order LPs should probably be using options. 2. Most people that are trading spot should probably be using range order LP.
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